articles wholly unsuited to the wants and habits of the people. When the continental markets were opened in 1814 and 1815, the first shippers of colonial and other produce made large profits; but in consequence of the crowding of fresh speculators, many of whom were strangers to commercial affairs, into the field, the markets were quite overloaded; and such a recoil took place, that Leith, and some other towns, did not for some years recover from the bankruptcy and ruin of which it was productive. But the exportations consequent upon the first opening of the trade to Buenos Ayres, Brazil, and the Caraccas, were, in this respect, still more extraordinary. Speculation was then carried beyond the boundaries within which even gambling is usually confined; and was pushed to an extent and into channels that could hardly have been deemed practicable. We are informed by Mr Mawe, an intelligent traveller, resident in Rio Janeiro at the period in question, that more Manchester goods were sent out in the course of a few weeks than had been consumed in the twenty years preceding; and the quantity of English goods of all sorts poured into the city was so very great, that warehouses could not be found to contain them, and that the most valuable merchandise was actually exposed for weeks, on the beach, to the weather, and to every sort of depredation! But the folly and ignorance of those who crowded into this speculation was still more strikingly evinced in the selection of the articles sent to South America. Elegant services of cut-glass and china-ware were offered to persons whose most splendid drinking-vessels consisted of a horn or the shell of a cocoa-nut; tools were sent out having a hammer on the one side and a hatchet on the other, as if the inhabitants had had nothing more to do than to break the first stone they met with, and then cut the gold and diamonds from it; and some speculators actually went so far as to send skates to Rio Janeiro!!

The distress and ruin which followed these exportations 1 Mawe's "Travels in Brazil," p. 453-458.

is plainly to be ascribed to the almost inconceivable folly of those by whom they were made. If there be one species of knowledge more essential to those who embark in mercantile speculations than another, it is that they should be acquainted with the various products of the different commercial countries of the world, and with those which are in demand in them. And when ships are freighted and com modities sent abroad by persons so entirely destitute of this elementary instruction as to send skates to Rio, the wonder is, not that they should sometimes calculate wrong, but that they ever calculate right.

But, as has been before observed, the maintenance of a free intercourse amongst different countries, and the more general diffusion of sound instruction, seem to be the only means by which these miscalculations can be either obviated or mitigated. The effects consequent on improvident speculations being always far more injurious to the parties engaged in them than to any other class, the presumption is, that they will diminish both in frequency and force, according as the true principles of commerce come to be better understood. But whatever inconvenience may occasionally flow from them, it is abundantly plain, that instead of being lessened, it would be very much increased, were any restraints imposed on the freedom of adventure. When the attention of many individuals is directed to the same line of speculation; when they prosecute it as a business, and are responsible in their own private fortunes for any errors they may commit, they acquire a knowledge of the various circumstances influencing prices, and give them, by their combinations, a steadiness not attainable by any other means. It is material, too, to bear in mind, as was previously stated, that many, perhaps it might be said most, of those who press so eagerly into the market, when any new channel of commerce is opened, or when any considerable rise of price is anticipated, are not merchants, but persons engaged in other businesses, or living, perhaps, on fixed incomes, who speculate in the hope of suddenly increasing

their fortune. This tendency to gambling seldom fails to break out upon such occasions; but fortunately, these are only of comparatively rare occurrence; and in the ordinary course of affairs, mercantile speculations are left to be conducted by those who are familiar with business, and who, in exerting themselves to equalise the variations of price caused by variations of climate and of seasons, and to distribute the supply of produce proportionally to the effective demand, and with so much providence that it may not at any time be wholly exhausted, perform functions that are in the highest degree important and beneficial. They are, it is true, actuated only by a desire to advance their own interests; but the results of their operations are not less advantageous than those of the agriculturists who give greater fertility to the soil, or of the mechanists who invent new and more powerful machines.'

In the first chapter of this Part, we endeavoured to show that the quantity of labour required for the production of commodities forms the grand principle which determines their exchangeable worth, or the proportion in which any one commodity exchanges for others; and in the second. chapter, and the present, we have endeavoured to trace the influence of variations of demand and supply, and of speculation, on prices. These seem to exhaust all the really important practical questions involved in this part of the science. But as it is necessary, in order fully to understand the various questions involved in the theory of value, that the precise influence of variations in the rates of wages and profits, and in the species of capitals employed, should be appreciated, we shall devote the following chapter to an investigation of these matters. Being principally, however, intended for the use of the scientific reader, it may, without impropriety, be passed over by others.

1 The reader will find a great deal of valuable information, with respect to most of the points touched upon in this and the previous chapter, in Mr Tooke's excellent work on the "History of Prices."

CHAPTER IV.

Effect of the Employment of Capital in Production, and of Variations in the Rates of Wages and Profits on Value-(1) When the Capitals employed in Production are of the same Degree of Durability; and (2) when they are of different Degrees of Durability-A High Rate of Wages does not lay the Commerce of a Country under any Disadvantage.

Ir is admitted on all hands, that in the earlier stages of society, before capital is accumulated, the quantity of labour required to produce a commodity and bring it to market determines its value in exchange. But capital is only another name for that portion of the produce of industry which may be directly employed to support man, or to facilitate production. It is the result of anterior labour ; and when it is employed in the production of commodities, their value is determined, not by the immediate labour only, but by the total quantity, as well of immediate as of prior labour, the latter being embodied in the capital, necessarily laid out upon them. Suppose an individual can, in a day, without the help of weapons, kill a deer; but that it requires a day's labour to construct the weapons necessary to kill a beaver, and another day's labour to kill it it is evident, supposing the weapons are worn out or rendered useless in killing the beaver, that the labour required to kill it would suffice to kill two deer, and that it is, therefore, worth twice as much. The durability of the implements, or of the capital employed in any undertaking, is, consequently, an element of the greatest importance in estimating the value of its produce. Had the weapons employed by the beaver hunter been more durable. than has been supposed had they served, for example, to kill twenty beavers instead of one - then, the labour

required to kill a beaver being only one-twentieth part greater than that required to kill a deer, the value of the animals would have been regulated accordingly; and it is plain that, with every extension of the durability of the weapons, their values would be brought still nearer to equality.

It appears, therefore, inasmuch as capital is the result of anterior labour, that its employment does not affect the principle that the value of commodities depends on the quantities of labour required for their production. A commodity may be altogether produced by capital, without the co-operation of any immediate labour: inasmuch, however, as the value of capital is determined by the labour required for its production, it is obvious that the value of the commodities produced by its means is also, at bottom, determined by this same labour: or a commodity may be partly produced by capital, and partly by immediate labour, and then its exchangeable value will be proportioned to the sum of the two; or, which is still the same thing, to the total quantity of labour bestowed upon it. These principles are almost self-evident, and it is not easy to see how they can be made the subject of dispute or controversy; but considerable differences of opinion are entertained respecting the influence over value, of the employment of workmen by capitalists, and of fluctuations in the rate of wages.

It does not, however, seem that there is really much room for these differences. Suppose that some quantity of goods, a pair of stockings for example, freely exchanges for a pair of gloves, both articles being manufactured by independent workmen; it is easy to see that they would continue to preserve this relation, or to exchange for each other, provided the labour required for their production continued stationary, though the workmen were to be em

ployed by a master-manufacturer. In the first case, it is true, as Dr Smith has observed, that the whole goods produced by the workmen belong to themselves, and that, in the second case, they have to share them with their employers. But it must be recollected, that in the first