by Dr. Smith, was manifestly felt by him, that we refer to this criticism. It is because Mr. M'Culloch distinctly perceives and remarks, that another doctrine, in which nearly if not quite all the modern English Economists are at variance with the author of the "Wealth of Nations," is dependent upon that we have stated-the doctrine that individual advantage is not always a true test of the public advantageousness of different employments of capital. The successors of Smith maintain that it is, and strenuously deny what he teaches, that domestic trade is more productive, and maintains a larger industry than foreign trade. The consideration of this point will naturally occupy us in the following chapter.

CHAPTER VII.

EXCHANGE.

EXCHANGE arises from the division of labour. From the moment that men have attained the power to protect themselves and their crops from the wild beasts, agriculture begins to yield a surplus beyond the subsistence of those engaged in it. It would appear, from the prominence given by the traditions of most nations to the mighty hunter in their early history, that the struggle of man with the ferocious animals has been severe, and may for a time have seemed dubious. From Hercules down to St. George, the dragon-killer, prowess in the destruction of savage animals has been so marked a feature in the character of legendary heroes, as to afford evidence that men put a very high estimate upon services of this kind; an estimate naturally proportionate to the danger which such service averted. There are portions of the world at this day, in which carnivorous beasts divide the occupation of the earth with the human race, and greatly impair its power to multiply and find subsistence. The beasts of prey require graminivorous animals for their food, and the latter require vegetation, which is thus abstracted from the nourishment of human beings. The crisis of humanity is in the warfare by which the carnivorous animals, whose subsistence exhausts great tracts of land, are exterminated. An end once put to their joint occupation of the territory, there is no assignable limit to its power to maintain human population, and a surplus beyond the wants of its actual occupants at once rewards their toil. A portion of the community is then found withdrawing itself from the cultivation of the land, and employing its industry in the mechanic arts. The blacksmith and the weaver obtain their food by bartering their services and their wares with the farmer. Even before this stage of social advancement is reached, exchange of services is established in the domestic relations. The savage husband procures food and the wife dresses it; he hunts the fox and the beaver, and she makes their skins into clothing. Both are producers of services, which

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 contri-. buted 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 hich 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