part0011

"The rent for a house," says Adam Smith, "can be divided into two parts, one of which may very well be called the rent for the building, the other is commonly called the rent for the land. The rent for the building is the interest or the profit In order to put the trade of builder on the same level as the other trades, it is necessary that this rent is initially sufficient to pay the same interest that it would have obtained for its capital, if it had lent on good security, and secondly, to keep the house in constant condition, or what amounts to the same, to replace in a certain period of time the capital which had been employed to build it. "If, in proportion to the interest of the money, the trade of the builder offers at all times a profit much higher than this one, it will soon draw as much capital from other trades, as will bring it back to its level. If he at any time offers much less than that, other trades will soon draw as much capital as they will again increase this profit. Whatever part of the total rent of a house exceeds what is sufficient to allow this reasonable profit, goes naturally to the rent of the ground; and when the owner of the land and the owner of the building are two different people, he is in most cases fully paid on the first. In country houses, away from any large city, where the choice of land is plentiful, the ground rent is hardly anything, or no more than what the space on which the house is located would pay s 'he was employed in agriculture. In country villas, in the district of a big city, it is sometimes much higher, and the particular convenience, or the beauty of the situation, is often very well paid for it. Land rents are generally the highest in the capital, and in parts of the capital, where demand for houses is greatest, for whatever reason, whether for trade and business, for pleasure and society, or for the simple vanity and fashion. "A tax on the rent of the houses can be chargeable to the occupant, owner on the ground, or on the owner of the building. In ordinary cases, it can be assumed that the entire tax would be paid both immediately and definitively by the occupier.

If the tax were moderate and the circumstances of the country as they were fixed or progressive, the occupant of a house would have little reason to be satisfied with a worse description. But if the tax was high, or if any other circumstances were to decrease the demand for houses, the owner's income would fall, because the occupant would be partially offset by the tax by a reduction in the rent. It is, however, difficult to say in what proportions this part of the tax, which was saved by the occupier by a fall in rent, would fall on the rent of the building and the rent of the land. It is likely that both would initially be affected; but as the houses are, albeit slowly, but certainly perishable, and as we would no longer build them, until the builder's profits are restored to the general level, the construction rent, after a certain time, would be restored to its natural price. Since the builder only receives rent for the duration of the building, he could pays no part of the tax, in the most dire circumstances, for a longer period.

Paying this tax would therefore ultimately be the responsibility of the occupier and the landowner, but "how much of that final payment would be split between them," says Adam Smith, "may not be very easy to be determined. Division would likely be very different under different circumstances, and a tax of this type could, depending on these different circumstances, affect both the inhabitant of the house and the owner of the land very unevenly. "15

Adam Smith considers ground rents as subjects particularly suited to taxation. "Ground rents and ordinary rental of land," he says, "are a kind of income that the owner benefits in many cases, without any attention or attention on his part. Although a part of this income must be taken from him in order to cover the expenses of the State, no discouragement will be given to any kind of industry. the land and the labor of society, the real wealth and income of the great body of the people, could be the same after such a tax as before. Land rents and ordinary land rents are therefore perhaps the kinds of income that can best bear the imposition of a special tax. "It must be admitted that the effects of these taxes would be as Adam Smith described, but it would surely be very unfair to tax exclusively the income of a particular class of a community. The burdens of the state should be borne by all in proportion to their means: this is one of the four maxims mentioned by Adam Smith who should govern all taxes Rent often belongs to those who, after many years of hard work, have made their money and spent it their fortunes in the purchase of land, and it would certainly be a violation of this principle which should never be held sacred, the security of property, to subject it to unequal taxation. It is to be deplored that the stamp duty, with which the transfer of the land ownership is charged, materially hinders the transport of it between these hands, where it would probably be made the most productive. And if it is the case ed, that the land, considered as a subject suitable for exclusive taxation, would not only be reduced in price, to compensate for the risk of this taxation, but in proportion to the indefinite nature and the uncertain value of the risk, would become a suitable subject for speculation, participating more in the nature of the game, than in a sober trade, it will seem likely that the hands in which the earth would then be most apt to fall would be the hands of those who possess more qualities of the player, than qualities of the sober owner, who is likely to use his land to the greatest advantage.

A tax on hats will increase the price of hats; a tax on shoes, the price of shoes; if this were not the case, the tax would ultimately be paid by the manufacturer; his profits would be reduced below the general level and he would quit his trade. A partial tax on profits will increase the price of the product on which it falls: a tax, for example, on the profits of the hatter, would increase the price of hats; for if his profits were taxed, and not those of any other trade, his profits, unless he increased the price of his hats, would be lower than the general rate of profits, and he would quit his job for another.

Similarly, a tax on the farmer's profits would increase the price of corn; a tax on the clother's profits, the price of the fabric; and if a tax proportional to profits was imposed on all trades, each product would increase in price. But if the mine, which provided us with the level of our money, was in this country, and the profits of the miner were also taxed, the price of not the merchandise would increase, each man would give an equal proportion of his income, and everything would be as before.

If money is not taxed, and therefore allowed to keep its value, while everything else is taxed and is valued, the hatter, the farmer and the clothier, each employing the same capital and obtaining the same profits, pay the same amount of tax. If the tax is 100 l. , hats, fabric and corn will be increased by 100 l each . If the hatter wins by his hats 1100 l. , instead of 1000 l. , he will pay 100 l. to the government for the tax; and therefore will still have 1000 l. to dispose of goods for its own consumption. But as the fabric, corn and all the other products will increase in price for the same cause, he will not get more for his 1000 l. than before for 910 l. , and thus will it contribute by its expenses reduced to the requirements of the State; he will have, by the payment of the tax, made part of the products of the land and labor of the country at the disposal of the government, instead of using this part himself. If instead of spending his 1000 l. , he adds it to his capital, he will find in the rise in wages, and in the increase in the cost of raw materials and machinery, only his economy of 1000 l. does not represent more than a saving of 910 l. stood before.

If the money is taxed or if, for any other reason, its value is changed and all the products remain precisely at the same price as before, the profits of the manufacturer and the farmer will also be the same as before, they will continue to be 1000 l. ; and as they will each have to pay 100 l. in government, they will keep only 900 l. , which will give them less control over the products of the land and labor of the country, whether they spend them on productive or unproductive labor. Precisely what they lose, the government will gain. In the first case, the contributor to the tax would be, for 1000 l. , have as many goods as they had for 910 l. ; in the second, it would only be for 900 l. This is due to the difference in the amount of the tax; in the first case, it is only the eleventh of his income, in the second, it is a tenth; the money in the two cases being of a different value.

But although, if money is not taxed and does not change in value, all products will increase in price, they will not increase in the same proportion; they will not bear the same relative value to each other after the tax as before the tax. In the first part of this work, we discussed the effects of the division of capital into fixed and circulating capital, or rather into durable and perishable capital, on the prices of raw materials. We have shown that two manufacturers could use precisely the same amount of capital and make exactly the same amount of profit, but that they would sell their products for very different sums of money, depending on whether the capital they employed was rapid. , or slowly, consumed and reproduced. One could sell his goods for 4000 l. , the other for 10,000 l. , and they could both use 10,000 l. of capital, and get 20 percent. profit, or 2000 l. The capital of one could consist for example in 2000 l. circulating capital, to be reproduced, and 8000 l. fixed, in buildings and machinery; the capital of the other, on the contrary, could be 8000 l. of circulation, and only 2000 l. fixed capital in machinery and buildings. Now, if each of these people were to be taxed at 10 percent. on its income, i.e. 200 l. , one, for his company to bring him the general rate of profit, must carry his goods of 10,000 l. at 10,200 l. ; the other would also be obliged to raise the price of his goods by 4000 l. at 4200 l. Before the tax, the products sold by one of these manufacturers were 2½ times more precious than the products of the other; after the tax, they will be 2.42 times more precious: the single type will have increased by 2%; the remaining 5 percent: therefore, an income tax, while the value of money would remain unchanged, would change relative prices and the value of goods. This is true, if the tax instead of being imposed on profits was imposed on the goods themselves: provided that they are taxed in proportion to the value of the capital employed for their production, they would also increase, whatever their value, and they would therefore not keep the same proportion as before. A commodity, which went from ten to eleven thousand pounds, would not have the same relationship as before, to another which went from 2 to 3000 l. If, in these circumstances, the value of money increased, whatever the cause, it would not affect commodity prices in the same proportion. The same cause that would lower the price of one from 10,200 l. at 10,000 l. or less than 2 percent., would lower the price of the other by 4200 l. at 4000 l. or 4-3 / 4 percent. If they decreased in a different proportion, the benefits would not be equal; to make them equal, when the price of the first commodity was 10,000 l. , the price of the second should be 4000 l. ; and when the price of the first was 10,200 l. , the price for the other should be 4200 l.

Taking this fact into account will lead to an understanding of a very important principle, which, I believe, has never been announced. That's it; that in a country where no taxation remains, the change in the value of money resulting from scarcity or abundance will operate in an equal proportion on the prices of all products; only if a commodity of 1000 l. rise in value to 1200 l. , or fall to 800 l. , a commodity of 10,000 l. the value will increase to 12,000 l. or fall to 8000 l. ; but in a country where prices are artificially raised by taxation, the abundance of money from an influx, or the export and scarcity that results of foreign demand, will not operate in the same proportion on the prices of all products; some will increase or decrease by 5, 6 or 12 percent., others by 3, 4 or 7 percent. If a country were not taxed and the value of money fell, its abundance in each market would have similar effects on each. If meat increased by 20%, bread, beer, shoes, labor and all products would also increase by 20%; they must do so to ensure the same rate of profit for each trade. But this is no longer true when one of these products is taxed; if in this case they all increased in proportion to the fall in the value of money, the profits would be made unequal; in the case of taxed commodities, profits would be increased above the general level and capital would be withdrawn from one job to another, until a balance of profits was restored, which could not be the case only after a modification of the relative prices.

Will this principle not account for the various effects, which have been observed, have been produced on the prices of raw materials, from the modified value of money during the Bank-restriction? It was objected to those who maintained that the currency was at that time depreciated, from the excessive abundance of paper circulation, that, if this were the case, all the goods should have increased in the same proportion; but it was found that many had varied considerably more than others, and it was inferred that the rise in prices was due to something affecting the value of goods and not to any alteration in the value of money . However, it appears, as we have just seen, that in a country where raw materials are taxed, they will not all vary in price in the same proportion, either as a result of an increase or a decrease in value. currency.

If the profits of all trades were taxed, except the profits of the farmer, all goods would increase in monetary value, with the exception of raw products. The farmer would have the same income from corn as before and would also sell his corn at the same price; but since he would be obliged to pay an additional price for all the goods, except the wheat which he consumes, it would be for him a tax on expenses. He would not be relieved either of this tax by an alteration in the value of money, since an alteration in the value of silver could cause all the products taxed to sink at their old price, but the untaxed would fall below its old level; and therefore, although the farmer would buy his products at the same price as before, he would have less money to buy them.

The owner too would be in precisely the same situation, he would have the same wheat and the same silver rent as before, if all the goods went up in price, and the money remained at the same value; and he would have the same wheat, but a lower silver rent, if all the goods remained at the same price: so that in both cases, although his income was not directly taxed, he would indirectly contribute to the money collected .

But suppose that the farmer's profits are also taxed, he would then be in the same situation as the other traders; his gross proceeds would increase, so that he would have the same monetary income, after paying the tax, but he would pay an additional price for all basic products he consumed, including raw products.

Its owner would however be located differently, he would benefit from the tax on the profits of his tenant, because he would be compensated for the additional price at which he would buy his manufactured products, if they increased in price; and it would have the same monetary income, if as a result of an increase in the value of money, the goods sold at their former price. A tax on the farmer's profits is not a tax commensurate with the gross product of the land, but with its net product, after the payment of rent, wages and all other charges. Since the cultivators of the different types of land, no. 1, 2 and 3, use precisely the same capital, they will obtain precisely the same benefits, regardless of the quantity of raw product, which one can obtain more than the other. . ; and therefore they will all be taxed in the same way. Suppose that the gross product of the land of quality n ° 1 is 180 qrs., That of n ° 2, 170 qrs. And of n ° 3, 160, and each one is taxed 10 quarters, the difference between the product of n ° 1, n ° 2, and No. 3, after paying the tax, will be the same as before; because if number 1 is reduced to 170, number 2 to 160 and number 3 to 150 qrs; the difference between 3 and 1 will be as before, 20 qrs .; and from n ° 3 and n ° 2, 10 qrs. If, after the tax, the prices of corn and all other commodities were to remain the same as before, the monetary rent as well as the corn rent would remain unchanged; but if the price of corn and all other commodities were to increase as a consequence of the tax, the monetary rent would also increase in the same proportion. If the price of corn was 4 l. per quarter, the rent for No. 1 would have been 80 l. , and that of n ° 2, 40 l. ; but if the corn has increased by ten percent., or to 4 l. 8 sec. , the rent would also increase by ten percent., for twenty quarters of the corn was then worth 88 l. and ten quarters 44 l. ; so that in any case, the owner will not be affected by such a tax. A tax on inventory profits always leaves the corn rent unchanged, and therefore the monetary rent varies with the price of corn; but a tax on raw products, or tithes, never leaves the corn rent unchanged, but generally leaves the money rent the same as before. In another part of this work, I observed that, if a property tax of the same amount of money, was imposed on all types of land under cultivation without taking into account the difference in fertility, its functioning would be very uneven, since it would be a benefit for the owner of the most fertile land. This would increase the price of corn in proportion to the burden borne by the farmer of the worst lands; but this additional price being obtained for the greatest quantity of products produced by the best lands, the farmers of these lands would profit during their leases, and then, the advantage would return to the owner in the form of an increase in rent. The effect of an equal tax on the farmer's profits is precisely the same; it increases the rent of the owners' money, if the money retains the same value; but as the profits of all other trades are taxed, as well as those of the farmer, and consequently the prices of all goods, as well as of corn, are increased, the owner loses as much by the increase in the price in money goods and corn on which his rent is spent, because he earns by the increase in his rent. If the money went up in value, and everything, after tax on the profits of the shares, fell back to their old prices, the rent would also be the same as before. The owner would receive the same cash rent and get all the com how it was spent at its old price; so that in all circumstances he would continue not to be taxed.

A tax on the profits of the shares would also affect the shareholder if all the products increased in proportion to the tax; but if, by the alteration of the value of money, all the goods were to fall back to their old price, the shareholder would pay nothing for the tax; he would buy all his products at the same price, but still receive the same monetary dividend.

If it were agreed that by taxing the profits of a single manufacturer, the price of its goods would increase, to put it on an equal footing with all other manufacturers; and that by taxing the profits of two manufacturers, the prices of two descriptions of goods must increase, I do not see how one can dispute that by taxing the profits of all the manufacturers, the prices of all the goods would increase, provided that the mine that provided us with the money, were taxed in the country. But since money, or the monetary norm, is a commodity imported from abroad, the prices of all commodities could not get up; because such an effect cannot occur without an additional amount of money, which cannot be obtained in exchange for expensive goods, as indicated on page 108. If however such an increase could take place, it could not be permanent, as this would have a powerful influence on foreign trade. In exchange for imported goods, these expensive goods could not be exported, so we should continue to buy for some time, although we have stopped selling; and should export silver, or bullion, until the relative prices of commodities are almost the same as before. It seems to me absolutely certain that a well-regulated profit tax would ultimately bring domestic and foreign products to the same price they were charged before the tax was imposed.

Since taxes on raw products, tithing, taxes on wages and the necessities of the worker, by raising wages and decreasing profits, they will all benefit, but not equally, from the same effects.

The discovery of machinery, which significantly improves home manufacturing,tends to increase the relative value of silver, and therefore to encourage its importation. Any taxation, any increased obstacles, either to the manufacturer or to the producer of goods, tend on the contrary to lower the relative value of money, and therefore to encourage its export.

"The wages of the lower classes of workers", says Adam Smith, "I have endeavored to show in the first book, are everywhere necessarily regulated by two different circumstances: the demand for labor and the ordinary or average price of provisions. labor demand, depending on whether it is increasing, stationary or declining, or requiring a growing, stationary or declining population, regulates the subsistence of the worker and determines how liberal it must be, moderate The ordinary or average price of provisions determines the amount of money that must be paid to the worker to allow him, from one year to the next, to buy this liberal subsistence, moderate or scarce. demand for labor, and the price of provisions therefore remains the same, a direct tax on labor wages can only have the effect of raising them a little higher than the tax. "

Mr. Buchanan presented two objections to the proposal, as presented here by Dr. Smith. First, he denies that money labor wages are governed by the price of provisions; and second, he denies that a tax on labor wages would raise the price of labor. On the first point, Mr. Buchanan's argument is as follows, page 59: " Labor wages, it has already been pointed out, do not consist in money, but in what money buys, namely provisions and other necessities; and the allocation of the worker outside the ordinary stock will always be proportional to the supply. Where food is cheap and abundant , its share will be all the greater; and where it will be scarce and dear ones , it will be less. His salary will always give him his fair share, and they cannot give him more. It is an opinion indeed, adopted by Dr. Smith and most of the other writers, than the prize money of labor is regulated by the money price of supplies, and when supplies go up in price wages increase proportionally, but it is clear that the price of labor is not necessarily related to the price of food, because it entirely depends on the supply of workers compared to the of order. price of provisions is some indication of a deficient supply, and arises in the natural course of things, in order to delay consumption. A smaller amount of food, shared among the same number of consumers, will obviously leave a smaller share for everyone, and the worker must bear his share of the common need. To spread this burden evenly and to prevent the worker from consuming his subsistence as freely as before, the price increases. But it seems that wages must increase with him, so that he can still use the same amount of a rarer commodity; and thus nature is represented as counterbalancing its own objectives: first, to increase the price of food, to decrease consumption, and then, to increase wages to give the worker the same offer as before. "

In Mr. Buchanan's argument, it seems to me that there is a great mixture of truth and error. Because a high price of provisions is sometimes caused by a deficient offer, Mr. Buchanan assumes it as a certain indication of a deficient offer. He attributes to a single cause, that which may arise from several. It is undoubtedly true that, in the case of a deficient offer, a small This quantity will be shared between the same number of consumers and a smaller share will go to each. To spread this deprivation equally and to prevent the worker from consuming his subsistence as freely as before, the price increases. It must therefore be conceded to Mr. Buchanan that any increase in the price of provisions, occasioned by a deficient supply, will not necessarily increase wages in money for work; because consumption must be delayed; which can only be done by reducing the purchasing power of consumers. But, because the price of provisions is increased by a deficient supply, we are by no means guaranteed to conclude, as Mr. Buchanan seems to do, that there may not be an abundant supply, with a high price; not a high price for money only, but for all other things.

The natural price of raw materials, which always ultimately governs their market price, depends on the ease of production; but the quantity produced is not proportional to this installation. Although the land, which is now under cultivation, is far less than the land cultivated three centuries ago, and therefore the difficulty of production is increased, who may have the slightest doubt, but that the quantity produced now far exceeds the quantity then produced? Not only is a high price compatible with an increased offer, but it rarely fails to accompany it. If therefore, because of taxation or the difficulty of production, the price of provisions increases and the quantity is not diminished, the wages in money of labor will increase; for, as M. Buchanan rightly pointed out, "The wages of labor do not consist in money, but in what money buys, namely provisions and other necessities; and the allocation of the worker on the stock common, will always be proportional to the provision. "

Regarding the second point, if a tax on labor wages would raise the price of labor, Mr. Buchanan says: "After the worker has received fair remuneration for his work, how can he appeal against his employer , for what he is then obliged to pay in taxes? There is no law or principle in human affairs to justify such a conclusion. After the worker has received his wages, he is in hiskeep, and he must, to the extent of his means, bear the burden of all the abuses to which he may later be exposed: because he clearly has no way of forcing those to reimburse him, who have already paid him the fair price for his work. "Mr. Buchanan quoted with great approval the following able passage from Mr. Malthus' work on population, which seems to me to completely answer his objection." The price of labor, when left to find its natural level, is the most important political barometer, expressing the relationship between supply and demand, between the quantity to be consumed and the number of consumers; and, taken on average, regardless of accidental circumstances, it also clearly expresses the desires of society in matters of population, that is to say whatever the number of children at marriage necessary to maintain the population exactly At present, the price of labor will be just sufficient to support this number, or be above or below, depending on the state of the real funds, for the maintenance of labor , which it is stationary, progressive or retrograde. But instead of considering it from this perspective, we view it as something we can raise or lower at leisure, something that depends primarily on His Majesty's justices of the peace. When an increase in the price of provisions already expresses that the demand is too great for supply, in order to put the worker in the same state as before, we increase the price of labor, that is to say that we are increasing demand and we are therefore very surprised that the price of provisions continues to rise. In this we act in much the same way, as if, when the quicksilver in the common windshield stood against the storm , we had to lift it by forced pressure so that it was settled fairly , then be greatly surprised that it continues to rain. "

"The price of labor will clearly express the desires of society in matters of population;" it will just be enough to provide for the needs of the population, which at that time required the state of funds for the maintenance of workers. If the worker's salary was previously sufficient only to provide the required population, he will, after tax, be insufficient for this offer, because he does not have the same funds to spend on his family. The workforce will therefore increase, as demand continues, and it is only by increasing the price, that supply is not controlled.

Nothing is more common than seeing hats or malt going up when taxed; they increase because the required supply would not be assured if they did not increase: thus with labor, when wages are imposed, its price increases, because, otherwise, the required population would not be maintained. Mr. Buchanan does not authorize all that is alleged, when he says that "if he (the worker) were effectively reduced to a simple allowance of necessity, he would not then undergo any more abatement of his wages, because he could not the conditions continue his race? " Suppose that the circumstances of the country are such, that the lowest workers are not only called to continue their race, but to increase it; their wages would have been regulated accordingly. Can they multiply if a tax takes part of their salary and reduces them to the bare minimum?

There is no doubt that a taxed good will not increase in proportion to the tax,if demand decreases and the quantity cannot be reduced. If metallic money were in general use, its value would not be increased for a long time by a tax, in proportion to the amount of the tax, because at a higher price, demand would be decreased and the quantity would not be decreased. ; and undoubtedly the same cause frequently influences labor wages, the number of workers cannot be increased or decreased rapidly in proportion to the increase or decrease in the fund which must employ them; but in the assumed case, there is no necessary decrease in the demand for labor, and if it decreases, the demand does not decrease in proportion to the tax. Mr. Buchanan forgets that the funds raised by the tax are used by the government to keep workers, unproductive, but still workers. If labor does not increase when wages are taxed, there would be a sharp increase in competition for labor, since the owners of capital, who would have nothing to pay for such a tax, would have the same funds to involve work; while the government that collected the tax would have a funds for the same purpose. The government and the people thus become competitors, and the consequence of their competition is an increase in the price of labor. Only the same number of men will be employed, but they will be employed at additional wages.

If the tax had been immediately imposed on the people, their manpower maintenance fund would have been reduced just as the government fund for this purpose would have been increased; and therefore there would have been no increase in wages; because although there would be the same demand, there would not be the same competition. If, at the time of collection of the tax, the government immediately exported the product in the form of a subsidy to a foreign state, and if therefore these funds were devoted to the maintenance of foreigners, and not of English workers, such as soldiers , sailors, etc. & vs .; then, indeed, there would be a decrease in the demand for labor, and wages might not increase even if they were taxed; but the same would happen if the tax had been imposed on consumer products, on profits from inventories, or in another way, the same amount had been collected to provide this subsidy: less labor could be employed at home. In one case, wages cannot go up, in the other they must go down. But suppose that the amount of a tax on wages is, after being levied on the workers, paid free of charge to their employers, that would increase their monetary funds for the maintenance of the workforce, but that n 'would increase neither goods nor labor. This would therefore increase competition between employers of labor, and the tax would ultimately be collected without loss for either the master or the worker. The captain would pay a higher price for the work; The addition received by the worker would be paid to the government in the form of taxes and returned to the masters. It should not be forgotten, however, that tax revenue is often spent unnecessarily and that by decreasing capital, it tends to decrease the real fund for maintaining the workforce; and therefore decrease real demand. Taxes then, generally, insofar as they affect the real capital of the country, reduce the demand for labor, and therefore it is a probable, but not necessary, nor particular consequence of a tax on wages, that if wages increased, they would not increase by an amount precisely equal to the tax.

Adam Smith, as we have seen, fully admitted that the effect of a payroll tax would increase wages by at least the tax, and would ultimately, if not immediately, paid by the labor employer. So far, we fully agree; but we differ essentially in our views on the subsequent operation of such a tax.

"A direct tax on labor wages, therefore," says Adam Smith, "although the worker may perhaps pay it with his own hand, could not properly be even advanced by him; at least if the demand and the average price of provisions stayed the same after the tax as before. In all these cases, not only the tax, but something more than the tax, would in fact be advanced by the person who would use it immediately different cases are the responsibility of different people. The increase that such a tax could the wages of the manufacturing workforce would be advanced by the master manufacturer, who would have the right and the obligation to charge him a profit on the price of his goods . The increase which such a tax could cause in field work would be advanced by the farmer who, to maintain the same number of workers as before, would be obliged to employ more capital. In order to recover this larger capital, as well as the ordinary profits of the stock , it would have to keep a greater part, or what amounts to the same thing, the price of a greater part of the product of the land, and by Consequently, he should pay less rent to the owner. In this case, the final payment of this salary increase would fall to the owner, as well as the additional profits of the farmer who had advanced it . In all cases, a direct tax on labor wages must, in the long term, lead both to a greater reduction in land rent and a greater increase in the price of manufactured products than what would have resulted from the correct valuation. from an amount equal to the product of the tax, partly on the rental of the land and partly on consumer goods. " Flight. iii. p. 337. In this passage, it is stated that the additional wages paid by farmers will ultimately fall on the owners, who will receive reduced rent; but that the additional wages paid by manufacturers will cause the price of manufactured goods to rise, and therefore fall on the consumers of these products.

Suppose now that a society is made up of owners, manufacturers, farmers and workers. The workers, it is agreed, would be paid for the tax; - but by whom? - who would pay the part which would not fall on the owners? - manufacturers could not pay any part of it; for if the price of their goods increased in proportion to the additional wages they paid, they would be in a better position after before the tax. If the cloth-maker, the hatter, the shoemaker, etc., should each be able to increase the price of their goods by 10%, - assuming 10%. to reward them completely for the extra wages they paid, if, as Adam Smith says, "they would have the right and the obligation to charge the extra wages with a profit on the price of their goods", they could each consume as much as before each other's property, and therefore they would pay nothing for the tax. If the clothier paid more for his hats and his shoes, he would receive more for his fabric, and if the hatter paid more for his fabric and his shoes, he would receive more for his hats. All the manufactured products would then be bought by them with as many advantages as before, and insofar as the corn would not be increased in price when they had an additional sum to foresee at the time of its purchase, they would benefit from it and would not be harmed by such a tax.

If then neither the workers nor the manufacturers would contribute to such a tax; in order for farmers to also be compensated by a fall in rent, the owners alone must not only bear their full weight, but they must also contribute to the increase in the earnings of industrialists. To do this, however, they would have to consume all of the country's manufactured goods, since the additional price charged on the whole mass is little more than the tax initially imposed on workers in manufactured goods.

Now it will not be disputed that the cloth-maker, the hatter and all the other manufacturers,are consumers of reciprocal goods; It will not be disputed that workers of all kinds consume soap, clothing, shoes, candles and various other products: it is therefore impossible that the burden of these taxes should weigh solely on the owners.

But if workers do not pay part of the tax, and yet the prices of manufactured goods rise, wages must rise, not only to compensate for them, but for the increase in the price of manufactured goods, which, to the extent that this affects agricultural work, will be a new cause of lower rents; and, to the extent that it affects manufacturing labor, a further rise in the price of goods. This rise in the price of goods will again operate on wages, and the action and reaction, first of wages on goods, then of goods on wages, will be extended without any attributable limit. The arguments on which this theory is based lead to conclusions so absurd that one can immediately see that the principle is totally untenable.

All the effects which occur on the profits of stocks and labor wages, by an increase in rents and an increase in necessities,in the natural progress of society, and the increasing difficulty of production, will be produced by an increase in wages due to taxation; and therefore the benefits of the worker, as well as those of his employers, will be reduced by the tax; and not by this particular tax, but by any other that should raise an equal amount.

Adam Smith's error proceeds in the first place from the assumption that all the taxes paid by the farmer must necessarily fall on the owner, in the form of a deduction from the rent. On this subject, I have explained the most, and I hope that it has been shown, to the satisfaction of the reader, that since a lot of capital is used on land which does not pay rent, and since it is the result obtained by this capital which regulates the price of gross products, no deduction can be made from the rent; and therefore, either no remuneration will be paid to the farmer for a tax on wages, or, if it is made, it will have to be paid by an addition to the price of the raw products.

If taxes put unequal pressure on the farmer, he will be able to raise the price of pro crudeduce, to put yourself at the level of those who exercise other trades; but a tax on wages, which would affect it no more than it would affect any other trade, could not be abolished or offset by a high price for raw products; for the same reason which should encourage him to increase the price of corn, namely to be remunerated for the tax, would encourage the clothier to increase the price of the fabric, the shoemaker, the hatter and the upholsterer to increase the price of shoes. , hats and furniture.

If they could all increase the price of their goods, in order to be remunerated, with a profit, for the tax; as they are all consumers of each other's products, it is obvious that the tax can never be paid; who would be the contributors if all were compensated?

I therefore hope that I have succeeded in showing that any tax which has the effect of increasing wages will be paid by a reduction in profits, and therefore that a tax on wages is in fact a tax on profits.

This principle of the division of the proof labor and capital between wages and profits, which I have tried to establish, seems to me so certain that, except in the immediate effects, I think it matters little whether the profits of actions or the wages of labor are taxed. By taxing the profits of stocks, you would likely change the rate of increase in labor force funds, and wages would be disproportionate to the state of this fund, being too high. By taxing wages, the reward paid to the worker would also be disproportionate to the state of this fund, because it is too low. In one case by a fall, and in the other by an increase in monetary wages, the natural balance between profits and wages would be restored. A tax on wages then does not fall on the owner, but it falls on the profits of the stock: it does not "give right and does not oblige the master builder to charge him a profit on the prices of his goods", because he will not be able to increase their price, and therefore he must himself in full and without compensation pay such a tax. 16

If the effect of payroll taxes is as I have described them, they do not deserve the censorship done to them by Dr. Smith. He observes such taxes: "These taxes, as well as other taxes of the same kind, by increasing the price of labor, would have ruined most of Holland's factories. Similar taxes, although not so heavy, take place in the Milanese, in the States of Genoa, in the Duchy of Modena, in the Duchies of Parma, Placentia and Guastalla, and in the ecclesiastical States. A French author of a certain note, proposed to reform the finances of his country, by replacing in the room of the other taxes, this most ruinous of all the taxes. "There is nothing so absurd," says Cicero, "which has not sometimes been asserted by some philosophers." "And in another place, he says:" the taxes on necessities, by increasing the wages of labor, necessarily tend to increase the price of all manufactured products, and therefore to decrease the extent of their sale and consumption. "They would not deserve this censorship; even if Dr. Smith's principle was correct that these taxes would increase the prices of manufactured goods; for such an effect could only be temporary and would not expose us to any disadvantage in our foreign trade. cause increased the price of some manufactured products, it would prevent or control their export; but if the same cause generally operated on all, the effect would be purely nominal, and would not interfere with their relative value, and would in no way diminish the stimulation of barter trade, which all trade, both foreign and domestic, is really.

I have already tried to show that when a cause increases the price of all products in general, the effects are almost similar to a fall in the value of money. If money decreases in value, all products increase in price; and if the effect is limited to one country, it will affect its foreign trade in the same way as a high commodity price caused by general taxation; therefore, by examining the effects of low monetary value limited to one country, we also examine the effects of a high commodity price limited to one country. Indeed, Adam Smith was fully aware of the resemblance between these two cases and always argued that the low value of money, or, as he calls it, money in Spain, due to the ban on its export, was very prejudicial to the factories and the foreign trade of Spain. "But this deterioration in the value of money, which is the result either of the particular situation or of the political institutions of a particular country, takes place only in this country, is a question of very great importance which, far from trying to make any body really richer, tends to make each body really poorer. The increase in the silver price of all products, which in this case is unique to this county, tends to discourage more or less every type of industry that is carried on in and to enable foreign nations, by supplying almost all kinds of goods for a lesser amount of money than its own workers cannot afford, not to under-sell them only abroad, but even in the domestic market. "Vol. Ii. Page 278.

One, and I think that the only drawback of a low value for money in a country, coming from a forced abundance, has been skillfully explained by Dr. Smith. If the trade in gold and silver were free, "gold and silver which go abroad would not go abroad for nothing, but would yield an equal value of goods from one sort or another. Not all of these goods would be luxury goods and expenses, to be consumed by inactive people, who produce nothing in exchange for their consumption. As the wealth and real incomes of inactive people would not be increased by this extraordinary export of gold and silver, their consumption would not be either These goods would be, probably the greatest part, and certainly a part of them, made up of materials, tools and provisions for the employment and maintenance of workers, who would profitably reproduce full value Part of the dead stock of the company would thus be transformed into active stock and moving more industry than before. "

By not allowing free trade in precious metals when commodity prices rise, either through taxation or through the influx of precious metals, you are preventing part of society's dead stock from turning into active stock - prevent you from using a larger amount of industry. But that is the whole amount of evil; an evil never felt by countries where the export of silver is either authorized or complicated.

Trade between countries is at par, when they have precisely the quantity of money which, in the current situation, should be necessary to ensure the circulation of their goods. If the trade in precious metals were perfectly free and silver could be exported without any expense, trade could not be otherwise in all countries than at par. If the trade in precious metals was perfectly free, if they were generally used in circulation, even with transport costs, the ex the change could never in any of them deviate more from the par than by these expenses. These principles, I believe, are no longer in dispute. If a country used paper money not exchangeable for cash, and therefore not regulated by a fixed standard, the exchanges in this country could deviate as much from the peer that its currency could be multiplied beyond the quantity which would have was awarded by the general. trade, if the trade in silver had been free, and if the precious metals had been used, either for silver, or for the standard of silver.

If, by general operations of commerce, 10 million pounds sterling, of known weight and fineness of ingots, were to be the portion of England, and 10 million pounds in paper were substituted, no effect would be produced on exchange; but if, by the abuse of the power to issue paper money, 11 million pounds were to be used in circulation, the exchange would be 9 per cent. against England; if 12 million people were employed, the exchange would be 16%; and if 20 million, the exchange would be 50 percent. against Eng Earth. To produce this effect, however, it is not necessary to use paper money: any cause which keeps in circulation a greater quantity of books than it would have circulated, if trade had been free, and the precious metals d A known weight and finesse had been used, either for money or for the monetary norm, would produce exactly the same effects. Suppose that by cutting money, each book does not contain the amount of gold or silver it should contain by law, more of these books could be used in circulation than if they didn were not cut. If one tenth of each book was removed, 11 million of those books could be used instead of 10; if two tenths were removed, 12 million could be used; and if half were removed, 20 million might not be deemed unnecessary. If the latter amount were used instead of 10 million, each product in England would be increased to double its old price, and the exchange would be 50 percent. against England, but this would not cause any disturbance in foreign trade, nor would it discourage the production of a single commodity. If, for example, the tissue has grown England from 20 l. at 40 l. per piece, we must export it as freely as before the rise, for a compensation of 50%. would be made to the foreign buyer in exchange; so that with 20 l. of his money, he could buy an invoice which would enable him to pay a debt of 40 l. In England. In the same way if he exported a commodity which cost 20 l. at home, and which sold in England for 40 l. he would only receive 20 l. , for 40 l. in England would only buy an invoice for 20 l. on a foreign country. The same effects would arise from whatever cause, 20 million could be forced to perform traffic activities in England, if only 10 million were needed. If a law as absurd as the ban on the export of precious metals could be applied and if this ban resulted in the forced circulation of 11 million instead of 10, the exchange would be 9%. against England; if 12 million, 16%; and if 20 million, 50%. against England. But no discouragement would be given to the factories of England; if the original products were sold at a high price in England, so would the foreign products; and if they were high or low would be of little importance to the foreign exporter and importer, when, on the one hand, it would be obliged to grant compensation in exchange when its products were sold at a high rate, and received the same compensation when he was forced to buy English products at a high price. The only inconvenience which could then happen to a country of keeping by prohibitive laws a greater quantity of gold and silver in circulation than it would remain otherwise, would be the loss which it would suffer from employing part of its capital unproductively, instead of using it productively. In the form of money, this capital produces no profit; in the form of materials, machines and food, against which they could be exchanged, it would be productive of income and would add to the wealth and resources of the state. So I hope I have satisfactorily proven that a relatively low price of precious metals, due to taxation, or in other words, a generally high price of commodities, would not be a disadvantage for a state, as part of the the metals would be exported, which, by increasing their value, lower raw material prices again. And furthermore, if they were not exported, if, by prohibitive laws, they could be kept in a country, the effect on trade would offset the effect of high prices. If then the taxes on necessities and wages did not raise the prices of all the products on which labor was spent, they could not be condemned on such grounds; and, moreover, even if the opinion that they would have such an effect was justified, they would not be prejudicial in this respect.

It is undoubtedly true that "taxes on luxury goods do not tend to increase the price of other products, except that of taxed products". but it is not true that taxes on necessities, by increasing the wages of labor, necessarily tend to increase the price of all manufactured products. "It is true that" luxury taxes are ultimately paid by consumers of the taxed products, without any retribution. They fall indifferently on all kinds of income, labor wages, profits from stocks and rental of land; "but it is not true", that taxes on necessities to the extent that they affect the working poor , are finally paid partly by the owners in the reduction of the rent of their grounds and partly by the rich consumers, owners or others, in the advanced price of the manufactured products; "because to the extent that these taxes affect the working poor , they will be almost entirely paid for by the fall in profits from stocks, only a small part being paid by the workers themselves in decreasing the demand for labor, than the taxation of all kinds tends to produce.

It was from Dr. Smith's misconception of the effect of these taxes that he was led to the conclusion that "the middle and upper ranks of people, if they understood their own interests, should always oppose all taxes on necessities. " life, as well as all direct taxes on labor wages. " This conclusion follows from his reasoning," that the final payment for both is entirely up to themselves, and always at considerable extra cost. They weigh most heavily on the owners, who always pay double; in that of the owners, by the reduction of their rent, and in that of the rich consumers, by the increase in their expenses. The observation of Sir Matthew Decker, that certain taxes are in the price of certain goods, sometimes repeated and accumulated four or five times, it is perfectly just as regards the taxes on the necessities of life. In the price of leather, for example, you have to pay, not only the tax on the leather of your own shoes, but part of that on the shoemaker and the tanner. You must also pay the tax on the salt, soap and candles that these workers consume when they are employed in your service, as well as the tax on the leather, that the salt, soap and candlestick consumes, while he is employed in their service. "

However, since Dr. Smith does not claim that the tanner, the salt maker, the soap maker and the candle maker will each benefit from the tax on leather, salt, soap and candles ; and since it is certain that the government will not receive more than the tax imposed, it is impossible to imagine that the public could pay more to anyone. The rich consumers can pay and, in fact, will pay the poor, but they will not pay more than the total amount tax; and it is not in the nature of things that "the tax must be repeated and accumulated four or five times".

A taxation system may be defective; more can be collected from the people than what is found in state coffers, in part, because of its effect on prices, can eventually be received by those who benefit from the particular mode in which taxes are imposed. These taxes are pernicious and should not be encouraged; for it can be established as a principle that, when taxes function properly, they conform to the first of Dr. Smith's maxims and raise the people as little as possible beyond what enters the public treasury of the state. Say says: "Others offer financing plans and suggest ways to fill the sovereign's coffers at no cost to his subjects. But unless a financing plan is in the nature of a business venture , it cannot give more to the government than it takes, either from individuals or from the government itself, in another form. Something cannot be done out of thin air with a wand . to be disguised, whatever forms we may constrain to a value, whatever metamorphosis we may subject it to, we can only have value by creating it or taking it from others. The best of all financing plans is to spend little, and the best of all taxes is the lowest. "

Dr. Smith consistently argues, and I think rightly, that the working classes cannot contribute materially to the burdens of the state. A tax on necessities or on wages will therefore be transferred from the poor to the rich: if then, the sense of Dr. Smith is, "that certain taxes are in the price of certain goods sometimes repeated, and accumulated four or five times," in the sole purpose of achieving this goal, namely the transfer of tax from the poor to the wealthy, they cannot be condemned on this account.

Suppose that the fair share of the taxes of a wealthy consumer is 100 l. , and that he would pay it directly, if the tax were imposed on income, wine or any other luxury, he would not suffer any prejudice if, by the imposition of necessities, he were to be called only for the payment of 25 l. , with regard to his own consumption of basic necessities and that of his family, but should be required to repeat this tax three times, paying an additional price for other products in order to compensate workers or their employers for the tax which they were called to advance. Even in this case, the reasoning is not conclusive: because if there is no more paid than what is required by the government; how important can it be for the wealthy consumer, whether he pays the tax directly, paying a higher price for a luxury item, or indirectly, paying a higher price for basic necessities and other goods that he consumes? If the people do not pay more than what the government receives, the wealthy consumer will only pay their fair share; if more is paid, Adam Smith should have indicated by whom it is received.

Mr. Say does not seem to me to have systematically adhered to the obvious principle, which I quoted from his good work; because on the next page, speaking of taxation, he says: "When it is pushed too far, it produces this lamentable effect, it deprives the contributor of part of its wealth, without enriching the State. This is what we can understand if we consider that the consumption power of each man, whether productive or not, is limited by his income. He cannot then be deprived of part of his income, without being obliged to proportionately reduce his consumption. Hence a decrease in the demand for these goods, which it no longer consumes, and in particular those on which the tax is imposed. This decrease in demand results in a decrease in production, and therefore in taxable goods. The contributor will then lose part of his enjoyment; the producer, part of his profits; and the treasury, part of its revenue. "

Mr. Say cites the salt tax in France, before the revolution; which, he says, has halved salt production. However, if less salt was consumed, less capital was used to produce it; and therefore, although the producer would get less profit from the production of salt, he would get more from the production of other things. If a tax, however heavy it may be, falls on income and not on capital, it does not decrease demand, it only modifies its nature. It allows the government to consume as many products of the land and the workforce of the country as before by individuals who contribute to the tax. If my income is 1000 l. per year, and I am called for 100 l. per year for a tax, I can only demand nine-tenths of the quantity of goods I have consumed before, but I allow the government to demand the other tenth. If the taxed goods are corn, my demand for corn does not have to decrease, as I might prefer to pay 100 l. per year more for my corn, and for the same amount decrease in my demand for wine, furniture or any other luxury. 17 Less capital will therefore be used in the the trade in wine or furnishings, but more will be used in the manufacture of these products, on which the taxes levied by the government will be spent.

Mr. Say says that Mr. Turgot, by halving the market rights on fish ( entry and market fees on the tide ) in Paris, has not reduced the quantity of their products, and that as a result, consumption of fish must have doubled. He deduces from this that the profits of the fisherman and those who engage in trade must also have doubled and that the incomes of the country must have increased, by the total amount of these profits increased; and by stimulating accumulation, it had to increase the resources of the state. 18

Whether taxes are levied on income or on capital, they reduce the taxable income of the State. If I stop spending 100 l. on wine, because by paying a tax of this amount, I allowed the government to spend 100 l. instead of spending them myself, a hundred pounds of property is necessarily withdrawn from the list of taxable persons basic products. If the income of individuals in a country is 10 million, they will have at least 10 million taxable goods. If by taxing a million, a million were transferred to the government, their revenues would remain nominally 10 million, but they would remain with only nine million taxable products. There are no circumstances in which taxation does not interfere with the enjoyments of those on whom taxes ultimately fall, and no means by which these enjoyments can be extended again, but the accumulation of new revenues .

Taxation can never be applied in the same way, that it operates in the same proportion on the value of all products and all the same to keep them at the same relative value. It frequently operates very differently from the intention of the legislator, by its indirect effects. We have already seen that the effect of a direct tax on maize and raw products is, if money is also produced in the country, to increase the price of all products, as the raw products enter in their composition, and therefore destroy the natural relationship that previously existed between them. Another indirect effect is that it raises wages and lowers the rate of profit; and we have also seen, in another part of this work, that the effect of a rise in wages and a fall in profits is to lower the silver price of the goods which are produced to a higher degree by the use of fixed capital.

The fact that a taxed good can no longer be exported so profitably is so well understood that a disadvantage is frequently accorded to its export and that a duty is imposed on its import. If these disadvantages and rights are established precisely, not only on the products themselves, but on everything that they may indirectly affect, there will indeed be no disturbance in the value of precious metals. Since we could export a product as easily after being taxed as before and no special facility would be granted for imports, precious metals would not enter the list of exportable products any more than before. .

Of all the products, none is perhaps as taxable as those which, either by nature or art, are produced withspecial installation. As far as foreign countries are concerned, these products can be classified under the head of those who are not regulated in their price by the quantity of labor granted, but rather by the whim, the tastes and the power of the buyers. If England had more productive tin mines than the other countries, or if, from machines or fuels of superior quality, she had special facilities for the manufacture of cotton products, the prices of tin and cotton products would still be regulated in England by the comparative amount of labor and capital. necessary for their production, and competition from our merchants would make them very inexpensive to foreign consumers. Our advantage in the production of these products could be so decided, that they could probably bear a very high additional price on the foreign market , without very significantly reducing their consumption. This price which they could never reach, while competition was free at home, by any other means than by an export tax. This tax would fall entirely to foreign consumers, and part of the expenses of the government of England would be defrayed by a tax on land and other labor. countries. The tea tax, which is currently paid by the English people and used to cover the expenses of the English government, could, if it were imposed in China, on the export of tea, be diverted towards payment of expenses. of the government of China.

Luxury taxes have a certain advantage over necessities taxes. They are generally paid on income and therefore do not diminish the productive capital of the country. If the wine has increased much in price because of the taxation, it is probable that a man would prefer to give up the pleasures of the wine, than to make important encroachments on his capital, to be able to buy it. They are so identified by the price that the contributor is barely aware that he is paying a tax. But they also have their drawbacks. First, they never reach capital, and on some extraordinary occasions, it may be appropriate that even capital contributes to public demands; and second, there is no certainty as to the amount of tax, as it may not achieve equal income. A man anxious to save will exempt himself from a tax on wine, by giving up its use. Income of the country may be intact, yet the state may not be able to levy a tax shilling.

Whatever habit makes it delicious, it will be reluctantly abandoned and will continue to be consumed despite a very heavy tax; but this reluctance has its limits, and experience shows every day that an increase in the nominal amount of the tax often decreases products. A man will continue to drink the same amount of wine, although the price of each bottle should be increased by three shillings, which would give up the use of wine instead of paying four. Another will just pay four, but refuse to pay five shillings. The same can be said of other luxury taxes: many would pay a tax of 5 l. for the pleasure of a horse who would not pay 10 l. or 20 l. It is not because they cannot pay more that they give up the use of wine and horses, but because they will not pay more. Every man has a certain standard in his mind by which he values the value of his pleasures, but this standard is as diverse as the human character. A country whose financial situation has become extremely artificial, by the malicious policy of accumulating a large national debt, and consequently of enormous taxation, is particularly exposed to the disadvantages of this method of raising taxes. After visiting with a fee the whole round of luxury; after laying horses, cars, wine, servants and all the other pleasures of the rich, under contribution; a minister is prepared to conclude that the country has reached maximum taxation, because by increasing the rate, it cannot increase the amount of any of these taxes. But in this conclusion, he will not always be right, because it is very possible that such a country could carry a very large addition to its charges without undermining the integrity of its capital.

The taxation of all goods, whether essential or luxury, will cause, while the money remains at an unchanged value, an increase in their prices by an amount at least equal to the tax. 19 A tax on manufactured goods workers would have the same effect on wages as a corn tax, which differs from other necessities only by being the first and most important on the list; and this would produce exactly the same effects on the profits of stocks and foreign trade. But a luxury tax would only have an effect on increasing their price. It would be entirely the responsibility of the consumer and could neither raise wages nor reduce profits.

The taxes levied on a country for the purpose of sustaining war or for ordinary government expenses, and which are mainly devoted to the support of unproductive workers, are levied on the productive industry of the country; and any savings that can be made from these expenses will generally be added to income, if not to the capital of contributors. When, for the expenses of a yearlong war, twenty millions are raised by means of a loan, it is the twenty millions which are withdrawn from the productive capital of the nation. The million a year, raised by taxes to pay the interest on this loan, is simply transferred from those who pay it to those who receive it, from the contributor to the tax to the national creditor. The real expense is the twenty million, not the interest that has to be paid for it. 20 Whether whether interest is paid or not, the country will be neither richer nor poorer. The government could have immediately demanded the twenty million in the form of taxes; in which case it would not have been necessary to raise annual taxes to the tune of one million. However, that would not have changed the nature of the transaction. An individual instead of being asked to pay 100 l. per year, could have been forced to pay 2000 l. once and for all. He could also have agreed its convenience rather to borrow this 2000 l. , and pay 100 l. per year for the interest of the lender, only to save the largest sum of his own funds. In one case, it is a private transaction between A and B, in the other, the government guarantees B the payment of interest to be paid also by A. If the transaction had been of a private nature, no public register would be bound, and it would be a matter of relative indifference to the country whether A faithfully performed his contract with B, or unfairly withheld the 100 l. per year in its possession. The country would have a general interest in the faithful execution of a contract, but as regards the national wealth, it would have no other interest than to know if A or B would make these 100 l. more productive, but on this issue he would have neither the right nor the ability to decide. It could be possible that if A kept it for his own use, he could waste it unprofitable, and if he was paid to B, he could add it to his capital and use it productively. And the reverse would also be possible, B could waste it and A could use it productively. For wealth only, it can be equal or it is more desirable that A pays it or not; but claims of justice and good faith, a greater utility, must not be obliged to yield to those of a lesser; and consequently, if the State were called upon to intervene, the courts of law would oblige A to perform its contract. Debt guaranteed by the nation is no different from the above transaction. Justice and good faith demand that interest on the national debt continue to be paid and that those who have advanced their capital for general profit not be obliged to give up their fair claims, for reasons of expediency.

But regardless of this consideration, it is by no means certain that political utility would gain anything by the sacrifice of political integrity; it in no way follows that the part exempt from the payment of interest on the national debt would use it more productively than those to whom it is incontestably due. By canceling the national debt, a man's income could drop from 1000 l. at 1500 l. , but that of another man would be lowered by 1500 l. at 1000 l. The income of these two men now stands at 2500 l. , then they would no longer be. If the government were to raise taxes, there would be precisely the same taxable capital and the same income in either case. It is therefore not by the payment of interest on the national debt that a country is in distress, nor by the exemption from payment that it can be alleviated. It is only by saving income and reducing expenditure that national capital can be increased; and neither income would be increased, nor expenditure would be reduced by the annihilation of the national debt. It is through the abundant spending of government and individuals and through loans that a country is impoverished; therefore, all measures designed to promote the public and private economy will alleviate public distress; but it is an error and an illusion, to suppose that a real national difficulty can be lifted, by moving it from the shoulders of a class of the community, which should rightly bear it, to the shoulders of another class , which, on all principles of equity should not bear more than their share. From what I said, it should not be inferred that I consider the borrowing system to be the best calculation to cover extraordinary state expenses. It is a system which tends to make us less economical - to blind us to our real situation. If the expenses of a war were 40 million per year, and the share that a man should contribute to this annual expenditure was 100 l. , he would endeavor, being immediately called for his part, to quickly save the 100 l. of his income. By the loan system, he is called to pay only the interest of these 100 l. or 5 l. per year, and considers that it does enough by saving these 5 l. of his expenses, then deludes himself with the conviction that he is as rich as before. The whole nation, by reasoning and acting in this way, saves only the interest of 40 million, or two million; and thus, not only to lose all the interests or profits which 40 million capital, employed in a productive way, would procure, but also 38 million, the difference between their savings and their expenditure. If, as I have already observed, each man had to make his own loan and contribute fully to the requirements of the State, at the end of the war, the taxation would cease and we would immediately become in a natural state of prices. . Out of from his private funds, A might have to pay B interest on the money he had borrowed from him during the war, to enable him to pay his spending quota; but with that, the nation would have no worries. A country which has accumulated a large debt is placed in a most artificial situation; and although the amount of taxes, and the increase in the price of labor, cannot, and I do not think, place it under any other disadvantage compared to foreign countries, with the exception of the inevitable to pay these taxes, yet it becomes the interest of each contributor to remove his shoulder from the burden and move this payment from himself to another; and the temptation to withdraw, as well as its capital, to another country, where it will be exempt from such burdens, finally becomes irresistible and overcomes the natural reluctance that each man feels to leave the place of his birth and the scene of his beginning associations. A country which became involved in the difficulties of frequenting this artificial system would act wisely by redeeming them, at the price of any portion of its property which might be necessary to repay its debt. What is wise in an individual is wise also in a nation. A man who has 10,000 l. , paying him an income of 500 l. , for which he must pay 100 l. per year towards the interest on the debt, is really only worth 8000 l. , and would be just as rich, if he continued to pay 100 l. per year, or at the same time, and for one time, sacrificed 2000 l. But where, one wonders, would be the buyer of the property that he must sell to obtain these 2000 l. ? The answer is simple: the national creditor, who must receive these 2000 l. , will want an investment for its money, and will be ready either to lend it to the landowner or to the manufacturer, or to buy from them part of the property which they must have. To this end, the shareholders themselves would greatly contribute to this. Such a project has often been recommended, but we fear, I fear, neither enough wisdom nor enough virtue to adopt it. It must be admitted, however, that during peace our incessant efforts must aim at repaying the part of the debt contracted during the war; and that no temptation to relieve, no desire to escape the present, and I hope temporary distress, should prompt us to relax in our attention to this great object. No shipwreck The fund can be effective in reducing debt if it does not come from the excess of government revenues over government spending. It is unfortunate that the sinking fund in this country is only in name; because there is no excess of revenue over expenditure. It should by economy, make what it is supposed to be, a really effective fund for the payment of the debt. If, at the outbreak of a future war, we have not reduced our debt considerably, one of the two things must happen, or all the expenses of this war must be defrayed by taxes raised from year to year. year, the end of this war, if not before, submits to a national bankruptcy; no not that we will not be able to withstand significant additions to the debt; it would be difficult to limit the powers of a great nation; but there are certainly limits to the price which, in the form of perpetual taxation, individuals will submit to pay for the privilege of living simply in their country of origin.

When a product is at a monopoly price, it is at the highest price at which consumers are willing to buy it. Com the products are only at a monopoly price when, by any possible device, their quantity can be increased; and when therefore, competition is entirely on one side - between buyers. The monopoly price of one period can be much lower or higher than the monopoly price of another, because competition among buyers must depend on their wealth, tastes and whims. These particular wines, which are produced in very limited quantities, and these works of art, which by their excellence or their rarity, have acquired a fanciful value, will be exchanged for a quantity very different from the product of ordinary labor, according to society. is rich or poor, because it has an abundance or a rarity of these products, or as it can be in a coarse or polished state. The tradable value of a commodity at a monopoly price is therefore not regulated by the cost of production.

Raw products are not at a monopoly price, since the market price of barley and wheat is as much regulated by their cost of production as the market price of fabric and flax. The only difference is that this portion capital employed in agriculture regulates the price of corn, that is, the part that does not pay rent; that, in the production of manufactured products, each portion of capital is employed with the same results; and since no portion pays rent, each portion is also a price regulator: corn and other raw products can also be increased in quantity, using more capital on the land, and therefore they are not at a price monopoly. There is competition between sellers and between buyers. This is not the case in the production of these rare wines and these precious specimens of art of which we have spoken; their quantity cannot be increased and their price is limited only by the extent of the power and the will of the buyers. The rent of these vineyards can be increased beyond any moderately transferable limit, because no other land being able to produce such wines, none can be put in competition with them.

Maize and the raw products of a country may indeed for a time sell at a monopoly price; but they can only do this permanently when no capital can be used profitably on the land and therefore their production cannot be increased. At that time, each portion of cultivated land and each portion of capital employed on the land will yield rent, differing in effect in proportion to the difference in yield. At that time, too, any tax that may be imposed on the farmer will fall on the rent, not the consumer. He cannot increase the price of his corn because, by hypothesis, it is already at the highest price at which buyers will buy it or will be able to buy it. He will not be satisfied with a lower rate of profit than other capitalists, and therefore his only alternative will be to obtain a reduction in rent or to quit his job.

Mr. Buchanan considers maize and raw products as a monopoly price because they bring in a rent: all products which bring in a rent, he supposes that they must be made at a monopoly price; and from there he deduces that all taxes on the raw products would fall on the owner and not on the consumer. "The price of corn," he says, "who always af fording a rent, being in no way influenced by the costs of its production, these costs must be paid on the rent; and when they go up or down, the consequence is therefore not a higher or lower price, but a higher or lower rent. From this point of view, all taxes on servants, horses or agricultural implements are in reality property taxes; the burden on the farmer for the duration of his lease, and on the owner, when the lease comes to be renewed. Likewise, all of these improved farming tools that save farmer's expense, such as threshing and harvesting machines, all of which gives him easier access to the market, like good roads, canals and bridges, although they reduce the initial cost of corn, do not lower its market price. Everything saved by these improvements therefore belongs to the owner as part of his rent. "

It is obvious that if we cede to Mr. Buchanan the basis on which his argument is based, namely that the price of corn always brings in rent, all the consequences for which he struggles naturally follow. The taxes on the farmer would not then fall on the consu sea but rented; and all the improvements in the breeding would increase the rent: but I hope to have sufficiently specified that until a country is cultivated in all its parts, and to the highest degree, there is always a portion of capital employed on the land which gives no return. rent, and that it is this portion of capital, the result of which, as in the factories, is divided between profits and wages, which regulates the price of wheat. The price of corn then, which does not allow a rent, being influenced by the costs of its production, these costs cannot be paid on the rent. The consequence of the increase in these expenses is therefore a higher price and not a lower rent. 21

It is remarkable that Adam Smith and Mr. Buchanan, who fully agree that the taxes on raw materials, a property tax and the tithe, all fall on land rent, not on consumers of raw products, should nonetheless admit that taxes on malt would fall on the beer consumer, and not on the owner's rent. Adam Smith's argument is so capable of stating the view that I take on the malt tax and all other taxes on raw products that I cannot help but offer to the reader's attention.

"The rent and profits of barley land must always be almost equal to that of other equally fertile and equally well-cultivated land. If they were less, part of the barley land would soon be used for other purposes. ; and if they were, more, more land would soon be devoted to the cultivation of barley. When the ordinary price of a particular product is what one can call a monopoly price, a tax on that -necessarily reduces the rent and profit 22 of the land that drives it. A tax on the products of these precious vineyards, whose wine is so far below effective demand, that its price is always higher than the natural proportion of that of other equally fertile and equally well-cultivated land, would necessarily reduce the rent and enjoy 22 of these vineyards. The price of wines being already the highest that one can obtain for the quantity commonly put on the market, it could not be raised higher without decreasing this quantity; and the quantity could not be diminished without an even greater loss, because the land could not be transformed into any other product of equal value. The total weight of the tax would therefore weigh on rent and profit; 23 correctly on the rental of the vineyard. "" But the regular price of barley was never a monopoly price; and the rent and profit of barley land has never been higher than its natural proportion compared to that of other equally fertile and cultivated land. The various taxes that have been imposed on malt, beer and beer have never lowered the price of barley ; never reduced rent and profit24 barley land. The price of malt for the brewer has steadily increased in proportion to the taxes imposed on it; and these taxes, as well as the various duties on beer and beer, have constantly increased the price or, what amounts to the same thing, reduces the quality of these products for the consumer. The final payment for these taxes fell constantly on the consumer, not the producer. "In this passage, Mr. Buchanan points out:" A duty on malt could never reduce the price of barley because, unless it is possible to make as much barley by malting it as by selling it unmalted, the required quantity would not be placed on the market. It is therefore clear that the price of malt must increase in proportion to the tax imposed on it, since demand could not otherwise be satisfied. The price of barley, however, is just as much a monopoly price as that of sugar; they both report rent, and the market price of the two has also lost all relevance to the original cost. "

Mr. Say's following argument is well-foundedon the same point of view as that of Mr. Buchanan: "The quantity of wine or corn that a parcel of land will produce will remain more or less the same, whatever the tax which it is charged. The tax can withdraw some half, or even three-quarters of its net product, or its rent please, and yet the land would be cultivated for half or the quarter not absorbed by the tax. ie the part of the owner, would be just the reason will be seen if we consider that in the case supposed, the quantity of products of the earth, and sent to the market, however, will remain the same. on the other hand, the grounds on which the demand for the product is based also continues the same.

"However, if the quantity of products delivered and the quantity requested necessarily continue in the same way, notwithstanding the establishment or increase of the tax, the price of these products will not vary; and if the price does not vary, the consumer not pay the smallest part of this tax.

"Will it be said that the farmer, the one who provides the labor and the capital, will bear, jointly with the owner, the burden of this tax? Certainly not; because the circumstance or the tax did not decrease the number of farms to be rented, nor increased the number of farmers. As in this case also the supply and demand remain the same, the rents of the farms must also remain the same. The example of the salt manufacturer, which cannot make pay to consumers that part of the tax, and that of the owner who cannot reimburse himself in the least, proves the error of those who maintain, unlike economists, that all taxes ultimately weigh on the consumer. "- Flight. ii. p. 338.

If the tax "took away half, even three-quarters of the net product from the land", and the price of the products did not increase, how could these farmers get the usual profits from stocks that paid very low rents, having this quality of land requiring a much greater share of work to obtain a given result, than land of more fertile quality? If the entire rent was paid, they some profits lower than those of other trades, and therefore would not continue to cultivate their land, unless they can increase the price of its products. If the tax fell on farmers, there would be fewer farmers willing to rent farms; if it fell on the owner, many farms would not be rented at all, because they would have no rent. But from what fund would they pay the tax that produces corn without paying rent? It is quite clear that the tax must fall on the consumer. How would such land, as Mr. Say describes in the next passage, pay a tax of half or three-quarters of its products?

“We see in Scotland poor land thus cultivated by the owner, and which could not be cultivated by anyone else. Thus, we also see in the interior provinces of the United States vast and fertile lands, whose income alone would not suffice. These lands are nevertheless cultivated, but it must be by the owner himself, or, in other terms, that he must add to the rent, which is little or not at all, the profits of his capital and his industry, to allow him to live in skill.It is well known that the land, although cultivated, brings no income to the owner when no farmer is willing to pay rent for it: which is proof that this land will only give the benefits of capital and industry necessary for its cultivation. "- Say , Vol. Ii. P. 127.

The poverty rate is a tax which is part of the nature of all these taxes and which, under different circumstances, falls on the consumer of raw products and goods, on the profits from stocks and on the rental of land. It is a tax which weighs particularly on the profits of the farmer and can therefore be considered as affecting the price of raw products. Depending on its degree of equality in manufacturing and agricultural profits, it will be a general tax on profits from stocks and will not lead to any alteration in the price of raw and manufactured products. In proportion to the farmer's inability to pay himself, by increasing the price of raw products, for the part of the tax which particularly affects him, it will be a tax on the rent, and will be paid by the owner. To know then the functioning of the poor rate at a given time, it is necessary to check if at that time it affects the profit of the farmer and the manufacturer to an equal or an unequal degree; and also if the circumstances are such as to give the farmer the power to increase the price of raw products.

The poor rates are supposed to be collected from the farmer in proportion to his rent; and therefore, the farmer who paid very little or no rent should pay little or no tax. If this were the case, the low rates, to the extent that they are paid by the farm class, would be entirely the responsibility of the owner and could not be passed on to the consumer of raw products. But I believe it is not true; the low rate is not levied according to the rent that a farmer actually pays to his owner; it is proportional to the annual value of its land, whether this annual value is given to it by the capital of the owner or the tenant.

If two farmers rented land of two different qualities in the same parish, the one paying rent of 100 l. per year for 50 acres of the most fertile land, and the other the same amount of 100 l. per 1,000 acres of less fertile land they would pay the same amount of poor rate, if none of them has attempted to improve the terrain; but if the farmer of the poor lands, supposing a very long lease, were to be brought at great cost to improve the productive capacities of his lands, by smoking, draining, fencing, etc., he would contribute to the poor rates, not in proportion to the rent actually paid to the owner, but at the actual annual value of the land. The rate may be equal to or greater than the rent; but whether this is the case or not, no part of this rate would be paid by the owner. It would have been previously calculated by the tenant; and if the price of the product was not sufficient to compensate it for all its expenses, as well as this supplement for the bad prices, its improvements would not have been undertaken. It is then obvious that the tax in this case is paid by the consumer; for if there had been no rate, the same improvements would have been made, and the usual and general rate of profit would have been obtained on the stock employed, with a lower price of wheat.

It also wouldn't make the slightest difference in this question, if the owner hadthese improvements himself, and had consequently increased his rent by 100 l. at 500 l. ; the price would also be billed to the consumer; for if he were to spend a large sum of money on his land, it would depend on the rent, or what is called rent, which he would receive as remuneration; and this would again depend on the price of maize, or other raw products, high enough not only to cover this additional rent, but also the rate at which the land would be subject. But if at the same time all the manufacturing capital contributed to the low rates, in the same proportion as the capital spent by the farmer or the owner to improve the land, then it would no longer be a partial tax on the profits of the farmer or from the owner. capital, but a tax on the capital of all producers; it could therefore no longer be transferred either to the consumer of raw products or to the owner. The profit of the farmer would not feel the effect of the rate any more than that of the manufacturer; and the first could not, any more than the second, plead it as a reason for an increase in the price of his merchandise. It is not the absolute, but the relative decline in profits, which avoids the capital of being employed in a particular trade: it is the difference in profit which sends capital from one job to another.

It must however be recognized that, in the current state of poor rates, a much larger amount falls to the farmer than to the manufacturer, in proportion to their respective profits; the farmer being evaluated according to the actual productions he obtains, the manufacturer only according to the value of the buildings in which he works, regardless of the value of the machinery, labor or stock that 'he can use. From this circumstance, it follows that the farmer can increase the price of his products by all this difference. Because, since the tax drops unevenly, and in particular on its profits, there would be less reason to devote its capital to the land, than to use it in another trade, unless the price of the raw products is increased. If on the contrary the rate had dropped with a greater weight on the manufacturer than on the farmer, he could have increased the price of his goods by the amount of the difference, for the same reason why the farmer, in similar circumstances, could increase the price of raw products. In a society therefore, which extends its agriculture, when the low rates fall with a particular weight on the ground, they will be paid partly by the employers of capital in reduction of the profits of stocks, and partly by the consumer of raw products in its price increased. In such a state of affairs, the tax may, in certain circumstances, even be advantageous rather than detrimental to the owners; because if the tax paid by the cultivator of the worst lands is higher in proportion to the quantity of products obtained, than that paid by the farmers of the most fertile lands, the rise in the price of corn, which will extend to all corn , will largely compensate the latter for the tax. This benefit will remain with them for the duration of their lease, but it will then be transferred to their owners. This would then be the effect of low rates in a changing society; but in a stationary country, or in a retrograde country, to the extent that capital could not be withdrawn from the earth, if another rate was levied for the support of the poor, the part of it which fell on the agriculture would be paid, during the current lease, by farmers, but upon the expiration of these leases, it would fall almost entirely to the owners. The farmer, who during his old lease, had spent his capital to improve his land, if he was still in his hands, would be assessed for this new tax according to the new value that the land had acquired by his improvement, and this the amount he would be obliged to pay during his lease, although his profits could thus be reduced below the general rate of profits; for the capital which he has spent can thus be incorporated into the land, that he cannot be withdrawn from it. If indeed he, or his owner, (if he had been spent by him) was able to withdraw this capital, and thus reduce the annual value of the land, the rate would drop proportionately, and as the product would be at the same time decreased, its price would increase; he would be compensated for the tax by invoicing it to the consumer and no part would fall on the rent; but this is impossible, at least with regard to a certain proportion of the capital, and consequently, in this proportion, the tax will be paid by the farmers during their leases and by the owners at their expiration. This additional tax, to the extent that it has decreased unevenly on manufacturers, would in such circumstances be added to the price of their products; for there can be no reason why their profits should be reduced below the general rate of profits, when their capital could be easily transferred to agriculture. 25

Distress will not be felt in this country of origin of such difficulties either, but in the countries to which its goods were previously exported. No country can import long if it does not export either, or cannot export long without also importing. If a circumstance should arise which would definitively prevent a country from importing the usual quantity of foreign products, this would necessarily reduce the manufacture of some of these products which were usually exported; and although the total value of the country's productions probably little modified, because the same capital will be used, but they will not be equally abundant and cheap; and considerable distress will be felt by the change of job. If by using 10,000 l. in the manufacture of cotton products for export, we imported 3000 pairs of silk stockings worth 2000 l each year . and, by the interruption of foreign trade, we should be obliged to withdraw this capital from the manufacture of cotton and to use it ourselves in the manufacture of stockings, we should still obtain stockings of a value of 2000 l . provided that no part of the capital has been destroyed; but instead of having 3000 pairs, we could only have 2500 pairs. In removing the capital from cotton in the storage trade, much distress could be experienced, but it would not significantly harm the value of national property, though that it can decrease the quantity of our annual productions.

The beginning of war after a long peace, or peace after a long war, generally produces considerable distress in commerce. It changes to a large extent the nature of the the jobs to which the respective capitals of the countries were previously devoted; and during the interval in which they settle in the situations which the new circumstances have made the most advantageous, a large part of the fixed capital is unemployed, perhaps completely lost, and the workers are without full employment. The duration of this distress will be more or less long depending on the strength of this repugnance, that most men feel abandoning the use of their capital to which they have been accustomed for a long time. It is often also prolonged by the restrictions and prohibitions which give rise to the absurd jealousies which prevail between the different States of the Commercial Commonwealth.

The distress which results from a repulsion from commerce is often confused with that which accompanies a decrease in national capital and a state of retrograde society; and it would perhaps be difficult to indicate the marks making it possible to distinguish them with precision.

However, when such distress immediately accompanies the transition from war to peace,our knowledge of the existence of such a cause will reasonably lead to believe that the funds for the maintenance of the workforce have been diverted rather from their usual channel than materially weakened, and that after temporary suffering, the nation will once again progress in prosperity. It should not be forgotten either that the retrograde condition is always a natural state of society. The youthful man grows into adulthood, then decays and dies; but it is not the progress of the nations. When they have arrived at a state of the greatest vigor, their new advance can indeed be stopped, but their natural tendency is to continue for centuries, to keep their wealth and their population unscathed.

In the rich and powerful countries where large capitals are invested in machines, the repulsion of trade will be more proven than in the poor countries where there is proportionally a much smaller amount of fixed capital and a much larger amount of circulating capital. , and where therefore more work is done by the work of men. It is not so difficult to withdraw a circulating fixed capital from any employment in which he can be hired. It is often impossible to divert machines that may have been erected for one production, for the purposes of another; but the worker's clothing, food and housing in one job may be used to support the worker in another, or the same worker may receive the same food, the same clothes and the same accommodation while their job is changed. But this is an evil to which a rich nation must submit; and it would be no more reasonable to complain, than it would be for a wealthy merchant to complain that his ship was exposed to the dangers of the sea, while the house of his poor neighbor was sheltered of all these dangers.

Such contingencies, although to a lesser degree, even agriculture is not exempt. War, which, in a trading country, interrupts state trade, frequently prevents the export of wheat from countries where it can be produced inexpensively to other countries less favorably situated. In such circumstances, an unusual amount of capital is attracted to agriculture and the country which before comes independent of foreign aid. At the end of the war, the import barriers were removed, and a destructive competition for the farmer began, from which he could not withdraw, without sacrificing a large part of his capital. The best policy of the state would be to impose a tax, the amount of which decreases from time to time, on the importation of foreign corn, for a limited number of years, in order to allow the home grower to withdraw his gradually capital of the earth. In so doing, the country might not make the most advantageous distribution of its capital, but the temporary tax to which it was subject would be to the advantage of a particular category, the distribution of capital of which was very useful in obtaining a when the import was stopped. If such efforts in times of emergency were followed by a risk of ruin at the end of the difficulty, capital would avoid such employment. In addition to the usual benefits of the stock, farmers would expect to be compensated for the risk they incurred of a sudden influx of corn, and therefore the price to the consumer, in the seasons when he most needed supplies, would be increased not only by the higher cost of growing corn at home, but also by the assurance that he would have to pay, in the price, for the particular risk to which this use of capital was exposed. Despite this, it would be more productive of wealth for the country, whatever capital sacrifice it might make, to allow the importation of cheap corn, it might be desirable to charge it a duty for a few years .

In examining the question of rent, we found that with each increase in the supply of corn and with the consequent fall in its price, capital would be withdrawn from the poorest lands; and better described land, which would then pay no rent, would become the standard by which the natural price of corn would be regulated. At 4 l. per district, lower quality land, designated by No. 6, could be cultivated; at 3 l. 10 s. # 5; at 3 l. # 4, and so on. If corn, as a result of permanent abundance, fell to 3 l. 10 s. the capital employed at No. 6 would cease to be employed; because it was only when the corn was 4 liters. that she could obtain general profits, even without paying rent: she would therefore be withdrawn to manufacture the goods with which all the corn grown on No. 6 would be bought and imported. In this job, it would necessarily be more productive for its owner, or it would not be withdrawn from the other; for if he could obtain more corn by cultivating it on land for which he did not pay rent, than by manufacturing a commodity with which he bought it, its price could not be less than 4 l.

It has been said, however, that capital cannot be withdrawn from the earth; that it takes the form of non-recoverable expenses, such as manuring, fencing, draining, etc., necessarily inseparable from the land. This is to some extent true; but this capital which is made up of cattle, sheep, hay and corn, carts, etc. can be removed; and it always becomes a matter of calculation whether these will continue to be used on the land, despite the low price of corn, or if they are to be sold and their value transferred to another use.

Suppose, however, that the fact is as indicated and that no part of the capital can be withdrawn; the farmer would continue to grow corn, and precisely the same amount too, regardless of the price he could sell; for it could not be in his interest to produce less, and if he did not use his capital thus, he would obtain no return. The corn could not be imported because it would sell it for less than 3 l. 10 s. rather than not selling it at all, and assuming that the importer could not sell it at that price. Although farmers, who cultivated land of this quality, would no doubt be harmed by the drop in the tradable value of the goods they produced, - how would the country be affected? We should have exactly the same amount of each commodity produced, but the raw products and corn would be sold at a much cheaper price. The capital of a country is made up of its goods, and as these would be the same as before, reproduction would continue at the same rate. This low price of corn would offer only the usual profits of the shares in the ground, n ° 5, which would then pay no rent, and the rent of all the best lands would fall: the wages would also fall and the profits would increase.

However low the price of corn may be, it could fall; if capital could not be withdrawn from the land and demand did not increase, no imports would take place; for the same amount as before would be produced at home. Although there would be a different division of products, and some classes would benefit from it and others would be hurt, the aggregate of production would be precisely the same, and the nation collectively would be neither richer nor poorer.

But there is this advantage which always results from a relatively low price of maize, - that the division of real production is more likely to increase the fund for the maintenance of the labor force, insofar as more will be assigned, under the name of profit, to the productive class, less, under the name of annuity, to the unproductive class.

It’s true, even if capital cannot bewithdrawn from the land, and must be used there or not at all: but if a large part of the capital could be withdrawn, as it obviously could, it would be withdrawn only when it would bring more to the owner in being removed than being suffered from staying where it was; it will only be removed when it can be used elsewhere more productively for both the owner and the public. He agrees to sink the part of his capital which cannot be separated from the earth, because with this part which he can take away, he can obtain a greater value and a greater quantity of raw products than by not sinking this part of the capital. Capital city. His case is exactly like that of a man who erected machines in his factory at great cost, machines which are subsequently improved so much by more modern inventions, that the goods which he produced are very valuable. . It would be entirely a matter of calculation with him if he were to abandon the old machine, and erect the most perfect, lose all the value of the old , or continue to take advantage of its relatively weak powers. Who, in such circumstances, would he urge him to give up using the best machines, as this would deteriorate or destroy the value of the old ones? However, this is the argument of those who would like us to ban the importation of corn, because it will deteriorate or destroy this part of the farmer's capital that is forever embedded in the land. They do not see that the end of all trade is to increase production, and that by increasing production, although you may cause partial loss, you increase general happiness. To be consistent, they should strive to stop all improvements in agriculture and manufacturing, as well as all machine inventions; for if these contribute to general abundance, and therefore to general happiness , they never fail, at the time of their introduction, to deteriorate or destroy part of the existing capital of farmers and industrialists.

Agriculture, like all other trades, and in particular in a trading country, is the subject of a reaction which, in the opposite direction, succeeds the action of a strong recovery. So when the war interrupts the importation of maize, its high price which results from it, attracts capital to the land, thanks to the significant profits which such employment gives it; this will likely result in more capital to be used and more raw products to market than demanded by the country. In such a case, the price of maize will fall due to an overabundance and great agricultural distress will be produced, until the average supply is brought back to a level corresponding to the average demand.

Value then essentially differs from wealth, because value does not depend on abundance, but on the difficulty or ease of production. The work of a million men in factories will always produce the same value, but will not always produce the same wealth. By the invention of machinery, by the improvement of skills, by a better division of labor, or by the discovery of new markets, where more profitable exchanges can be made, a million men can produce double, or be ble the quantity of wealth, of "necessities, conveniences and entertainment", in one state of the society, which they could produce in another, but they will not add anything of this fact to the value; for each thing rises or falls in value, in proportion to the ease or difficulty of producing it, that is to say in proportion to the quantity of labor employed for its production. Suppose that with a given capital, the work of a certain number of men produces 1000 pairs of stockings, and that by inventions in machines, the same number of men can produce 2000 pairs, or that they can continue to produce 1000 pairs, and produce in addition to 500 hats; then the value of the pair of socks 2000; or the 1000 pairs of stockings and 500 hats, will be neither more nor less than that of the 1000 pairs of stockings before the introduction of the machines; because they will be the product of the same amount of work. But the value of the general mass of the goods will nevertheless be reduced; for although the value of the increased quantity produced as a result of the improvement is exactly the same as the value of the lesser quantity produced, in the absence of improvement, an effect is also produced on the part of the goods not yet consumed, which were manufactured before the improvement; the value of these goods will be reduced, to the extent that they must fall to the level, quantity for quantity, of the goods produced under all the advantages of improvement: and society, notwithstanding the increase in the quantity of its goods, notwithstanding its increase in wealth and its increased means of enjoyment have less value. By constantly increasing the ease of production, we constantly decrease the value of some of the products before production, although by the same means we add not only to national wealth, but also to the power of future production. Many errors in political economy are due to errors on this subject, to consider an increase in wealth and an increase in value, to mean the same thing, and from unfounded notions as to what constitutes a standard measure of value. A man sees money as a standard of value, and a nation he says gets richer or poorer as his goods of all kinds can exchange for more or less money. Others represent money as a very convenient means of bartering, but not as an appropriate measure to estimate the value of other things: the real measure of value according to them is corn, 26 and a country is rich or poor, depending on whether its goods are exchanged more or less corn. There are still others, who consider a country rich or poor, depending on the amount of work it can buy. 27 But why should gold, corn, or labor be the standard measure of value, more than coals or iron? - more than cloth, soap, candles and other necessities of the worker? - why, in short, should any product, or all products together, be the norm, when such a norm is itself subject to fluctuations in value? Corn, as well as gold, may, due to difficulties or production facilities, vary by 10, 20 or 30 percent compared to other things; why should we always say that it was these other things that varied, not the wheat? This merchandise is invariable on its own, which requires at all times the same sacrifice of labor and labor to produce it. We have no knowledge of such a commodity, but we can hypothetically discuss and talk about it, as if we had it; and can improve our knowledge of science, by clearly showing the absolute inapplicability of all the standards that have been adopted so far. But supposing that one or the other is a correct standard of value, it would not yet be a standard of wealth, because wealth does not depend on value. A man is rich or poor, according to the abundance of necessities and luxuries he can command; and whether their value exchangeable for money, corn or labor is high or low, they will also contribute to the enjoyment of their owner. It’s by confusing ideas of value and wealth, or wealth, it has been argued, that by decreasing the quantity of goods, that is to say, necessities, conveniences and enjoyments of human life, wealth can be increased. If value was the measure of wealth, this could not be denied, because by scarcity the value of goods increases; but if Adam Smith is right, if riches consist of necessities and enjoyments, then they cannot be increased by a decrease in quantity.

It is true that the man in possession of a rare commodity is richer, if he can, through him, command more the necessities and the pleasures of human life; but as the general stock from which the wealth of each man is drawn is reduced in quantity, by all that any individual draws from it, the shares of other men must necessarily be reduced proportionally, because this favored individual can appropriate a greater amount for itself. .

Let water become scarce, says Lord Lauderdale, and be exclusively owned by an individual, and you will increase its wealth, because water will then have value; and if wealth is the aggregate of individual wealth, by the same means, you will also increase wealth. You will undoubtedly increase the wealth of this individual, but insofar as the farmer must sell part of his wheat, the shoemaker part of his shoes, and all the men abandon part of their property for the sole purpose of replenish with water. , which they had previously had for nothing, they are poorer in the whole quantity of goods which they are obliged to devote to this purpose, and the owner of the water profits precisely from the amount of their loss. The same amount of water and the same amount of goods are appreciated by all of society, but they are distributed differently. However, this supposes rather a monopoly of water than a scarcity of it. If it were rare, then the wealth of the country and individuals would in fact be diminished, to the extent that it would be deprived of part of one of its enjoyments. The farmer would not only have less corn to trade for other products that might be necessary or desirable for him, but he and any other individual would be shortened in the enjoyment of one of the most essential to their comfort. Not only would there be a different distribution of wealth, but a real loss of wealth.

We can then say of two countries possessing exactly the same amount of all the necessities and comfort of life, that they are also rich, but the value of their respective wealth would depend on the ease or the comparative difficulty with which they have been produced. Because if an improved machine allowed us to make two pairs of stockings, instead of one, without additional work, double the quantity would be given in exchange for one meter of fabric. If a similar improvement is made in the manufacture of the fabric, the stockings and the fabric will be exchanged in the same proportions as before, but they will both have lost value; for by exchanging them for hats, for gold or other goods in general, it is necessary to give twice the first quantity. Extend the improvement to gold production and all other products; and they will all return to their old proportions. There will be double the quantity of products produced annually in the country try, and therefore the wealth of the country will be doubled, but this wealth will not have increased in value.

Although Adam Smith gave the correct description of wealth, which I have noticed more than once, he then explains it differently and says, "A man must be rich or poor according to the amount of work he can afford to buy. " Now, this description differs essentially from the other and is certainly incorrect; for suppose that the mines become more productive, so that gold and silver lose value, thanks to the greater ease of their production; or that the velvets had to be made with so much less work than before, that they fell to half their former value; the wealth of all those who buy these goods would be increased: one man could increase the quantity of his plate, another could buy double the quantity of velvet; but with the possession of this additional plate and velvet, they could not employ more work than before; because as the exchangeable value of the velvet and the plate would be lowered, they must proportionally part with more of these kinds of wealth to buy a day's work. Wealth cannot then be estimated by the amount of work they can buy.

From what has been said, it will be seen that the wealth of a country can be increased in two ways: it can be increased by employing a greater part of the incomes in the maintenance of the productive workforce, which which will not only increase the quantity, but the value of the mass of the goods; or it can be increased, without using any additional amount of labor, by making the same amount more productive, which will add to the abundance, but not to the value of the goods.

In the first case, a country would not only become rich, but the value of its wealth would increase. He would become wealthy sparingly; by reducing spending on luxury and pleasure items; and use those savings in reproduction.

In the second case, there will be no needeither a reduction in spending on luxury and enjoyment, or an increase in the quantity of productive labor employed, but with the same labor more would be produced; wealth would increase, but not value. Of these two modes of increasing wealth, the latter must be preferred, because it produces the same effect without deprivation and reduction of enjoyments, which cannot fail to accompany the first mode. Capital is the part of a country's wealth that is used for future production and can be increased in the same way as wealth. Additional capital will be just as effective in producing future wealth , whether it comes from upgrading skills and machines or using more reproductive income; for wealth always depends on the quantity of goods produced, regardless of the ease with which the instruments used in production could be purchased. A certain amount of clothing and food will maintain and employ the same number of men, and therefore provide the same amount of work to do, whether produced by the work of 100 or 200 men; but they will be twice as large if 200 were used in their production.

Mr. Say seems to me to have been singularly unhappy in his definition of wealth and value in the first chapter of his excellent work: here is the substance of his reasoning: wealth, he observes, consists only of things that have value themselves: riches are great when the sum of the values that compose them is great. They are small when the sum of their values is small. Two things of equal value are riches of equal quantity. They have the same value when, by mutual agreement, they are freely exchanged for each other. Now, if humanity values something, it is because of the uses to which it applies. This ability, which certain things have, of satisfying the various needs of humanity, I call utility. To create objects that have any value is to create wealth, because the usefulness of things is the first foundation of their value, and it is the value of things that constitutes wealth. But we don't create objects: all we can do is reproduce matter in another form - we can make it useful. Production is therefore a creation, not of material but of utility, and it is measured by the value resulting from the utility of the object produced. The utility of any object, according to a general estimate, is indicated by the quantity of other goods for which it will be exchanged. This evaluation, resulting from the general estimate formed by society, constitutes what Adam Smith calls value in exchange; what Turgot calls appreciable value; and what we can refer to more briefly by the term value .

So far, Mr. Say, but in his account of value and wealth, he has confused two things which must always be separated, and which are called by Adam Smith, use value and exchange value. If, thanks to an improved machine, I can, with the same amount of work, make two pairs of stockings instead of one, I in no way alter the usefulness of a pair of stockings, although I reduce their value. If then I had exactly the same amount of coats, shoes, stockings and all the other things, as before, I should have exactly the same amount of useful objects, and should therefore also be rich, if utility was the measure of wealth; but I should have less value, because my stockings would only be half their old value. Utility is therefore not a measure of exchangeable value.

If we ask Mr. Say what wealth is, he tells us that he has valuables. If we then ask him what he means by value, he tells us that things are precious insofar as they have a use. If again we ask him to explain to us by what means we must judge the usefulness of objects, he replies, by their value. So the measure of value is utility, and the measure of utility is value.

Mr. Say, speaking of the excellences and imperfections of Adam Smith's great work, imputes to him, as a mistake, that "he attributes to the work of man alone the power to produce value. A more detailed analysis correct shows us that value is due to the action of work, or rather of the industry of man, combined with the action of agents that nature provides, and that of capitaltal. His ignorance of this principle prevented him from establishing the true theory of the influence of machines in the production of wealth. "

Contrary to the opinion of Adam Smith, Mr. Say, in the fourth chapter, speaks of the value which is given to the goods by the natural agents, such as the sun, the air, the pressure of the atmosphere, etc., which are sometimes substituted for the work of man, and sometimes agree with him in production.28

Mr. Say accuses Dr. Smith of neglecting the value that natural agents and machines place on goods.for he considered that the value of all things came from the work of man; but it does not seem to me that this accusation is established; Nowhere does Adam Smith undervalue the services these natural agents and machines provide for us, but he rightly distinguishes the nature of the value they add to goods - they are useful to us, increasing the abundance of products , making men richer, adding to the utility value; but since they do their work for free, as nothing is paid for the use of air, heat and water, the help they give us adds nothing to the value in return . In the first chapter of the second book, Mr. Say himself gives a statement of similar value, because he says that "utility is the foundation of value, that goods are only desirable, because they are in some way so useful, but that their value does not depend on their usefulness, not on the extent to which they are desired, but on the amount of work necessary to obtain them. " " The usefulness of a commodity thus understood, makes it an object of human desire, makes him desire and establishes it. When to get a thing, just desiring it, it can be considered as an article of natural wealth, given to man in unlimited quantity, and which he enjoys, without buying it by any sacrifice; such are air, water, sunlight. If he thus obtained all the objects of his desires and desires, he would be infinitely rich: he would lack nothing. But unfortunately this is not the case; most of the things which are convenient and agreeable to him, as well as those which are indispensable in the social state, for which man seems to be specially trained, are not given to him free of charge; they could only exist through the effort of certain works, the use of a certain capital and, in many cases, through the use of land. These are obstacles to gratuitous enjoyment; the obstacles from which actual production expenditure results; because we have to pay for the help of these production agents. "" It is only when this utility has been so communicated to a thing (namely by industry, capital and land) that it is a production, and that it has value . It is its usefulness that is the basis of the request, but the sacrifices and burdens necessary obtaining it, that is to say its price , limits the extent of this demand. "

The confusion that results from the confusion of the terms "value" and "wealth" will be better seen in the following passages.30 His pupil observed: "You also said that the wealth of a society was composed of the total sum of the values that it possessed; it seems to me to follow, that the fall of a production, from low for example, by decreasing the total sum of the value belonging to the society, decreases the mass of its wealth; " to which the following answer is given:" the sum of the wealth of the society will not fall for this account. Two pairs of stockings are produced instead of one; and two pairs at three francs, are also worth with a pair at six francs. The revenues of the company remain the same, because the manufacturer has earned as much on two pairs at three francs, that he has earned on a six franc pair. " So far, Mr. Say, though incorrect, is at least consistent. If value is the measure of wealth, society is also wealthy because value of all of its products is the same as before. But now for his deduction. "But when the income remains the same, and the production drops in price, the company really gets rich. If the same drop takes place at the same time in all the products, which is not absolutely impossible, the company procures at half of its old price, all the objects of its consumption, without having lost part of its income, would actually be twice as rich as before, and could buy twice as much goods. "

In the first passage, we are told that if each thing fell to half its value, of abundance, society would also be rich, for there would be twice the quantity of goods at half their former value, or in other words, there would be the same value. But in the last passage, we are informed that by doubling the quantity of products, although the value of each product should be halved, and therefore that the value of all the products together is exactly the same as before, the society would be twice as rich as before. In the first case, wealth is estimated by the amount of value: in the second, they are estimated by the abundance of products contributing to human pleasures. Mr. Say also says: "that a man is infinitely rich without valuables, if he cannot get all the objects he wants for nothing; however, we are told in another place" that wealth consists , not in the product itself, because it is not wealth if it has no value, but in its value. "Vol. Ii. P. 2.

F ROM the account that has been given the profits of stock, it appears that no capital accumulation will lower to permanently earnings, unless there is a permanent cause of rising wages. If the funds for manpower maintenance were doubled, tripled or quadrupled, it would not be long to find the required number of hands to be employed by these funds; but because of the increasing difficulty of making constant contributions to the country's food, funds of the same value would probably not maintain the same amount of work. If the needs of the worker could be constantly increased with the same ease, there could be no permanent altera rate of profit or salary, regardless of the amount of capital that could be accumulated. Adam Smith, however, uniformly attributes the fall in profits to capital accumulation and the competition that will result, without ever emphasizing the increasing difficulty of providing food for the additional number of workers that the additional capital will employ. "The increase in stocks," he says, "which increases wages, tends to lower profits. When the stocks of many wealthy merchants are transformed into the same trade, their mutual competition naturally tends to lower its profits; and when there is a similar increase in stocks in all the different trades in the same company, the same competition must have the same effect altogether. " Adam Smith is talking about an increase in wages here, but this is a temporary increase, increasing funds before the population increases; and he does not seem to see that at the same time as capital increases, the work to be done by capital increases in the same proportion. Mr. Say has however shown very satisfactorily that there is no capital which cannot be employed in a country, because demand does 'is limited only by production. No man produces, but with a view to consuming or selling, and he never sells, but with the intention of buying another commodity, which may be immediately useful to him, or which may contribute to future production. By producing, he therefore necessarily becomes either the consumer of his own goods, or the buyer and consumer of another person's goods. It should not be assumed that he should, for a long time, be uninformed about the goods he can produce most advantageously, in order to achieve the object he has in view, namely the possession of other goods; it is therefore unlikely that it will continually produce a commodity for which there is no demand. 31

The productions are always bought by productions, money is only the means by which the exchange takes place. It is possible to produce too much of a particular commodity, the glut of which on the market can be such that it does not reimburse the capital spent; but this cannot be the case for all goods; the demand for corn is limited by the mouths that must eat it, the shoes and coats by the people who must wear them; but although a community, or part of a community, may have as much corn and as many hats and shoes as it can or may want to consume, the same cannot be said of every commodity produced by nature or by art. Some would consume more wine if they had the capacity to get it. Others, having enough wine, would like to increase the quantity or improve the quality of their furniture. Others may want to decorate their land or expand their home. The wish to do all or part of these is established in the bosom of every man; nothing is necessary except the means, and nothing can afford the means, but an increase in production. If I had food and necessities at my disposal, I would not fail to have workers who would put me in possession of some of the objects most useful or most desirable to me.

Whether these increases in production and the consequent demand which they cause, reduce profits or not, depend solely on the rise in wages; and increasing wages, with the exception of a limited period, on the ease of producing food and the necessities of the worker. I say, except for a limited time, because no point is better established, that the supply of labor will always be ultimately proportional to the means of supporting them.

There is only one case, and it will be temporary, in which the accumulation of capital with a low price of food can be accompanied by a fall in profits; that is, when the funds needed to maintain the workforce grow much faster than the population; - wages will then be high and profits low. If each man had to give up the use of luxury and focus only on accumulation, a quantity of necessary products could be produced, for which there could be no immediate consumption. Among the commodities so limited in number, there could undoubtedly be a universal glut, and therefore there could be neither demand for an additional quantity of these products, nor profits from the employment of more capital. . If men stopped consuming, they would stop producing. This admission does not call into question the general principle. In a country like England, for example, it is difficult to assume that there may be a willingness to devote the entire capital and labor of the country to the production of necessities.

When the traders engage their capital in the foreign trade, or in the trade of portage, it is always by choice, and never by necessity: it is because in this trade their profits will be a little more important than in the internal trade .

Adam Smith aptly observed "that the desire for food is limited in every man by the narrow capacity of the human stomach, but the desire for conveniences and ornamentsof construction, clothing, equipment and household furniture, seems to have no limits or certain limits. "Nature then necessarily limited the amount of capital that can at some point be profitably engaged in agriculture, but it placed no limit on the amount of capital that can be used to provide" the conveniences and the ornaments "of life. Obtaining these gratuities in greater abundance is the object in view, and it is only because foreign trade, or the portage trade, will accomplish it better, than men. indulge in them, preferably in the manufacture of the necessary products, or a substitute for them, at home. If, however, special circumstances, we were prevented from committing capital in foreign trade or in the portage trade , we should, although with fewer benefits, use it at home, and although there is no limit to the desire for "amenities, building ornaments, dress, equipment and household furnishings" there can be no limit to the capital that can be emp l oyals to obtain them, except what limits our power to maintain the workers who must produce them.

Adam Smith, however, talks about babywearingtrade not a choice but a necessity; as if the capital involved was inert there if it were not so employed, as if the capital of internal trade could overflow, if it was not limited to a limited amount. He says, "when the capital stock of a country is increased to such a degree that it cannot be used to supply consumption and support the productive labor of that particular country , the excess part of it naturally disgorges in transport trade, and performs the same functions in other countries. "

"About ninety-six thousand copses of tobacco are bought each year with part of the surplus products of British industry. But demand from Great Britain may not require more than fourteen thousand. If the four -the remaining two thousand, therefore, could not be sent abroad and exchanged for something more in demand at home , their importation would cease immediately, and with it the productive work of all the inhabitants of Great Britain , which are at present employed in preparing the goods with which these eighty-two thousand pigs are bought each year . " But this part of the is Britain's productive workforce employed to prepare another kind of goods, with which something more in demand at home could be bought? And if that could not, could we not use this productive work, although with less advantages, to manufacture these goods in demand at home, or at least a substitute? If we wanted velvets, could we not try to make velvets; and if we could not succeed, could we not make more fabric or some other object that is desirable to us?

We manufacture basic products and, with them, buy goods abroad, because we can get a larger quantity than we could do at home. We deprive ourselves of this craft, and we immediately manufacture again for ourselves. But this opinion of Adam Smith is in contradiction with all his general doctrines on this subject. "If a foreign country can provide us with a cheaper product than we can do, it is better to buy it with part of the products of our own industry, used so that we have a certain advantage. The industry general of the country being always proportional to the capital which employs it , will not be diminished thereby, but left only to discover how it can be used with the greatest benefit. "

Again. "Those, therefore, who have orders for more food than they can eat themselves, are always ready to exchange the surplus, or, what is the same thing, the price of it, for gratifications of another kind, satisfying the limited desire, are given for the amusement of those desires which cannot be satisfied, but seem to be quite endless. The poor, in order to obtain food, strive to to satisfy these fantasies of the wealthy; and to obtain it more certainly, they compete in the cheapness and the perfection of their work. The number of workers increases with the increasing quantity of food, or with the increasing improvement and the culture of land; and as the nature of their enterprise admits the most extreme subdivisions of work, the quantity of materials which they can work increases in a proportion much greater than their number. Hence a demand for all kinds of materials than the invention hu maine can use, either usefully or allied, in construction, clothing, equipment or household furniture; for fossils and minerals contained in the bowels of the earth, precious metals and precious stones. "

Adam Smith has rightly observed that it is extremely difficult to determine the rate of profit on equities. "The profit is so fluctuating that, even in a particular trade, and much more in the trades in general, it would be difficult to indicate the average rate. To judge what it may have been in the past or in remote periods , with a certain degree of precision, must be entirely impossible. " Yet, as it is evident that much money will be given for the use of money, while much can be done by it, suggests he, "the market interest rate will lead us to get a certain idea of the rate of profit and the history of the progress of interest gives us that of the progress of profits." Without a doubt, if the rate of 'market interest could be known precisely for a considerable period of time, we should have a fairly correct criterion for estimating profit growth.

But in all countries, starting from wrong notionsAs a matter of policy, the state intervened to prevent a fair and free market interest rate, by imposing heavy and ruinous sanctions on all those who take more than the rate set by law. In all countries, these laws are probably evaded, but the documents give us little information on this subject and indicate the legal and fixed rate rather than the market interest rate. During the current war, treasury and navy bills have often benefited from such a high discount that they have allowed their buyers 7 to 8% or a higher interest rate for their money. Loans have been granted by the government at interest above 6%. Individuals have often been forced, by indirect means, to pay more than 10% for interest on money; however, during this same period, the legal interest rate was uniformly 5%. We can then depend little on the information of what is the fixed and legal interest rate, when we find that it can differ considerably from the market rate. Adam Smith informs us that, from the 37th of Henry VIII, to the 21st of James I., 10 percent. the legal interest rate. Shortly after the restoration, it was reduced to 6%., and by Anne’s 12, 5 percent. He believes that the legal rate followed and did not precede the market interest rate. Before the American War, the government borrowed at 3% and the creditors of the capital and many other parts of the kingdom at 3½, 4 and 4½%.

The interest rate, although ultimately and permanently governed by the rate of profit, is however subject to temporary variations from other causes. With each fluctuation in the quantity and value of money, product prices naturally vary. They also vary, as we have already shown, from the alteration in the proportion of supply to demand, although there should be no greater ease or difficulty of production. When the market prices of goods fall from an abundant supply, a diminished demand or an increase in the value of money, a manufacturer naturally accumulates an unusual quantity of finished products, unwilling to sell them to very depressed prices. To meet his ordinary payments, on which he once depended on the sale of his property, he now endeavors to borrow on credit, and is often forced to grant a higher interest rate. However, this is only temporary; because either the expectations of the manufacturer were well entrenched, and the market price of its products increases, or he discovers that there is a permanent drop in demand, and he can no longer resist in the course of business: prices fall, l money and interest return to their true value. If, by the discovery of a new mine, by the abuses of the bank or by any other cause, the quantity of money increases considerably, its ultimate effect is to increase the prices of goods in proportion to the increased quantity of money; but there is probably always an interval during which a certain effect occurs on the interest rate.

The price of a financed asset is not a constant criterion for judging the interest rate. In wartime, the stock market is so crowded with continued government loans, that stock prices don't have time to settle in at their proper level before a new financing transaction takes place, or until 'be affected by the anticipation of political events. In peacetime, on the contrary, the ope the sinking fund rations, the reluctance that a particular category of people feels to divert their funds to another job than that to which they have been accustomed, which they think safe and in which their dividends are paid with the greatest regularity, raises the price of the shares and, consequently, lowers the rate of interest on these titles below the general rate of the market. It is also observable that, for different securities, the government pays very different interest rates. While 100 l. capital at 5%. the stock sells for 95 l. , a 100 l note . , will sometimes sell for 100 l. 5 s. , for which the invoice from the Treasury, no interest will be paid annually more than 4 l. 11 s. 3 d. : one of these securities pays a buyer at the above prices, an interest of more than 5¼ percent., the other but a little more than 4¼; a certain amount of these treasury bills is necessary as a safe and marketable investment for bankers; if they increased well beyond this demand, they would likely be as depreciated as the 5 percent. Stock. 3% stock. per year will always sell at a proportionately higher price than paying stock 5 percent., for the capital debt of neither can be discharged but at par, or 100 l. money for 100 l. Stock. The market interest rate can drop to 4 percent. The government would then pay the holder 5 percent. stock at par, unless he agrees to take 4 percent., or an interest rate below 5 percent. They would have no advantage in paying the holder 3 percent. until the market interest rate has dropped below 3 percent. per year. To pay interest on the national debt, large sums of money are withdrawn from circulation four times a year for a few days. These requests for money being only temporary, rarely affect prices; they are usually overcome by paying a high interest rate. 35

Suppose that to afford the usual and general profits from the stock, the price of maize in England should be 4 l. by shift; it could not then be exported to foreign countries where it sold for 3 l. 15 s. by quarter. But if a premium of 10 s. per quarter were given for export, it could be sold on the foreign market at 3 l. 10 s. , and therefore the same profit would be granted to the corn cultivator, that he sells it at 3 l. 10 s. abroad, or at 4 l. on the domestic market.

A premium, which should lower the price of British corn in the foreign country, below the cost of producing corn in that country, would naturally increase demand for British corn and decrease the demand for their own corn. This expansion in demand for British maize could not fail to increase its price for some time on the domestic market and, meanwhile, also to prevent its fall so low on the foreign market that the premium tended to occur . But the causes which thus operate on the market price of corn in England would have no effect on its natural price, on its real cost of production. Growing corn would require neither more labor nor more capital and, therefore, if the profits of the farmer's stock were previously only equal to the benefits of the stock of other traders, they will, after prices rise, considerably above them . By increasing the profits of the farmer's stock, the premium will serve as an incentive for agriculture and capital will be withdrawn from manufactured products for use on the land, until increased demand for the foreign market has been provided, when the price of corn falls at home again market at its natural and necessary price, and profits will again be at their ordinary and usual level. The increase in the supply of grain operating on the foreign market will also lower its price in the country to which it is exported and thus limit the profits of the exporter at the lowest rate at which he can afford to trade.

The ultimate effect of a premium on the export of corn is therefore not to raise or lower the price on the domestic market, but to lower the price of corn for the foreign consumer - across the board. the premium, if the price of maize had not previously been lower on the foreign market than on the domestic market - and to a lesser extent, if the price in the country had been higher than the price on the foreign market.

A writer in the fifth vol. of the Edinburgh Review on an export premium for maize, very clearly emphasized its effects on foreign and domestic demand. He also rightly pointed out that he would not fail to encourage agriculture in the exporting country; but it seems to have absorbed the common error that misled Dr. Smith, and I believe most other writers on it. He assumes, because the price of corn ultimately regulates wages, that he will therefore regulate the price of all other products. He says that the premium, "by increasing the profits of agriculture, will function as an incentive to breeding; by increasing the price of corn for consumers at home, it will decrease their purchasing power for the time being. necessary of life, and It is obvious, however, that this latter effect must be temporary: the wages of hardworking consumers had previously been adjusted by competition, and the same principle will adjust them again at the same rate, increasing money labor price, and thus other products, at the silver price of corn . The export premium, therefore, will ultimately increase the silver price of corn on the domestic market; not directly , but through increased demand on the foreign market and a consequent increase in the real price in the country: and this increase in the price of silver, when it has been communicated to other goods, will of course become fixed . "

If, however, I have succeeded in showing that it is not the rise in wages in labor money which drives up the price of raw materials, but that this rise always affects profits, it follows that the prices of raw materials would not increase as a result of a premium.

But a temporary increase in the price of corn, produced by increased demand from abroad, would have no effect on the monetary price of wages. The rise in maize results from competition for this offer, which was previously exclusively reserved for the domestic market. By increasing profits, additional capital is used in agriculture and increased supply is obtained; but until it is obtained, the high price is absolutely necessary to match consumption to supply, which would be thwarted by higher wages. The rise of corn is a consequence of its scarcity and is the means by which the demand of home buyers is diminished. If wages were increased, competition would increase and a further increase in the price of maize would become necessary. In this account of the effects of a premium, nothing was supposed to happen to increase the natural price of corn, by which its market price is ultimately governed; for it has not been assumed that additional labor would be necessary on the land to assure a given production, and that alone can increase the natural price. If the natural price of the fabric was 20 s. per yard, a strong increase in foreign demand could bring the price to 25 s. or more, but the profits which would then be made by the clothier would not fail to attract capital in this direction, and although demand should be doubled, tripled or quadrupled, supply would ultimately be obtained and the fabric would fall to its natural price of 20 s. Thus, in the supply of corn, although we should export 2, 3 or 800,000 quarters a year, it would ultimately be produced at its natural price, which never changes unless a different amount of labor is required to the production.

Perhaps in no part of Adam Smith's aptly celebrated work can his conclusions be found moreliable to objection, only in the chapter on premiums. First, he speaks of corn as a commodity whose production cannot be increased as a result of an export premium; it invariably supposes that it acts only on the quantity actually produced and is not a stimulus for the continuation of production. "In the years of plenty," he says, "by causing extraordinary export, it necessarily keeps the price of corn on the domestic market above what it would naturally fall into. In the years of scarcity, though the premium is frequently suspended, yet the large export it causes in years of abundance must frequently prevent, more or less, the abundance of one year from relieving the scarcity of another. abundance than in years of scarcity, generosity therefore necessarily tends to raise the silver price of corn a little higher than it would otherwise be on the domestic market. " 36

If nothing was consumed by the worker except corn, and if the portion he received was the smallest he needed, there was perhaps reason to suppose that the quantity paid to the worker could not in no case to be reduced, ... but wages in labor money sometimes do not increase at all, and never increase in proportion to the increase in the silver price of corn, because corn, although important, is not only part of the worker's consumption. If half of his salary was spent on corn, and the other half on soap, candles, fuel, tea, sugar, clothing, etc., products on which no increase is expected to take place , it is obvious that it would be just as well. paid with a bushel and a half of wheat, when it was 16 s. a bushel, as it was with two bushels, when the price was 8 s. per bushel; or with 24s . silver, as it was before with 16 s. His salary would only increase by 50%. although corn has increased by 100 percent, and therefore there would be enough reason to divert more capital to the land, if profits on other trades continued as before. But such a rise in wages would also encourage manufacturers to withdraw their capital from factories, to use it in the field; because while the farmer increased the price of his commodity by 100 percent and his salary by only 50 percent, the manufacturer would also be forced to raise his wages by 50 percent, when he had no compensation, in the rise of its manufactured product, for this increased production load; capital would therefore flow from manufactured goods to agriculture, until supply again lowers the price of corn to 8 s. per bushel and salary at 16 s. per week; when the manufacturer obtains the same profits as the farmer, and the capital tide ceases to go in both directions. This is in fact the mode in which the cultivation of corn is still widespread and the increased needs of the market supplied. Funding for maintaining the workforce increases and wages are increased. the the comfortable situation of the worker pushes him to marry - the population increases and the demand for corn increases its price compared to other things - the more the capital is profitably used in agriculture and continues to flow towards it until supply equals demand, when the price drops again and agricultural and manufacturing profits are brought to a new level.

But if wages were stationary after the price of maize rose, or increased moderately, or enormously, that does not matter for this question, since wages are paid by the manufacturer as well as by the farmer, and so in this regard. they must also be affected by an increase in the price of maize. But they are unevenly affected in their profits, insofar as the farmer sells his goods at an advanced price, while the manufacturer sells his at the same price as before. However, it is the inequality of profit, which is always the incentive to withdraw capital from one job to another, and therefore more corn would be produced, and less products produced. The factories wouldn't increase, because less was made, a supply would be obtained in exchange for the exported corn.

A premium, if it increases the price of corn, either increases it relative to the price of other products, or it does not. If so, it is impossible to deny the farmer's greatest profits and the temptation to withdraw capital, until his price is further lowered by an abundant supply. If it does not increase it compared to other products, where is the damage suffered by the domestic consumer, beyond the inconvenience of paying the tax? If the manufacturer pays a higher price for his corn, he is compensated by the higher price at which he sells his merchandise, with which his corn is ultimately bought.

Adam Smith's error comes precisely from the same source as that of the author of the Edinburgh Review; because they both think "that the silver price of corn regulates that of all other craft products". 37 "He regulates", says Adam Smith, "the cash price of labor, which must always be such as to allow the worker to buy enough corn to support himself and his family, either liberally, moderately or in short supply , in which the advancement, cessation, or deterioration of the circumstances of the company oblige its employers to maintain it. By regulating the price in money of all the other parts of the raw products of the grounds, it regulates that of the materials of almost all manufactures. By regulating the money price of labor, it regulates that of the making of art and industry, and by regulating both, it regulates that of complete manufacturing. The money price of labor, and whatever is produced either from the land or from labor must necessarily increase or decrease in proportion to the money price of corn. "

I have already tried to refute this opinion of Adam Smith. When he considers an increase in the price of basic products as a necessary consequence of an increase in the price of corn, he reasons as if there were no other fund from which the increase could be paid. He completely neglected the con consideration of profits, the decrease of which forms this fund, without increasing the price of goods. If this opinion of Dr. Smith were well founded, profits could never really fall, regardless of capital accumulation. If, when wages increased, the farmer could increase the price of his corn, and the clothier, the hatter, the shoemaker and all the other manufacturers could also increase the price of their products proportionately in advance, although they were estimated in money, they could all be raised, they would continue to have the same value in relation to each other. Each of these trades could order the same quantity as before of the goods of the others, which, since it is goods, and not money, which constitute wealth, is the only circumstance which could be important to them; and the whole increase in the price of raw products and merchandise would not be prejudicial to anyone other than those whose property consisted of gold and silver, or whose annual income was paid in contribution of these metals, that this either in the form of bullion or silver. Suppose the money is entirely set aside and all trading is done by bartering. In such circumstances, could corn increase in tradable value with other things? If so, it is not true that the value of corn regulates the value of all other products; for this, it should not vary in relative value for them. If he could not, then it must be argued that, whether the maize is obtained on rich or poor land, with much labor, or with little, with the help of machines or without, he would always exchange for an equal quantity of all other products.

I cannot however notice that, although the general doctrines of Adam Smith correspond to those which I have just quoted, it seems however that, in a part of his work, he correctly exposed the nature of the value. "The proportion between the value of gold and silver, and that of goods of any other kind, depends in any case, " he says, " on the proportion between the amount of labor that is necessary to bring a certain amount of gold and silver on the market, and what is necessary to bring in it a certain amount of any other kind of goods . " Does he not here fully recognize that if an increase in the amount of labor occurs product, needed to put on the market a kind of goods , while no increase takes place to introduce another way, these goods will increase in relative terms. If more labor is required to bring the fabric and gold to market, their relative value will not change, but if more labor is required to market corn and shoes, corn and shoes will not grow relative to fabric and money. Golden?

Adam Smith again considers that the effect of the premium is to cause a partial deterioration in the value of money. "This deterioration," he says, "of the value of silver, which is the effect of the fertility of mines, and which operates equally, or almost equally, in most of the trading world, is a matter of very little consequence from the rise in all money prices, even if it does not make those who receive them really richer, does not really make them poorer. A plate service becomes really cheaper, and everything the rest remains exactly the same actual value as before. " This observation is the most correct.

"But this deterioration in the value of money, which is the result either of the particular situation or of the political institutions of a particular country, takes place only in this country, is a question of very great importance which, far from trying to make any body really richer, tends to make each body really poorer. The increase in the silver price of all products, which in this case is specific to this country, tends to discourage more or less every type of industry that is carried on in and allow foreign nations, by supplying almost all kinds of goods for a lesser amount of money than its own workers cannot afford, to under-sell them, not only abroad, but even in the domestic market. "

I have tried elsewhere to show that a partial deterioration in the value of money, which will affect both agricultural and manufactured goods, cannot be permanent. To say that money is partially degraded, in this sense, is to say that all products are at a high price; but while gold and silver are free to make purchases on the cheapest market, they will exported for cheaper products from other countries, and reducing their quantity will increase their domestic value; raw materials will return to their usual level, and those adapted to foreign markets will be exported, as before.

We cannot therefore oppose a premium for this reason.

If then a premium increases the price of corn over all other things, the farmer will benefit and more land will be cultivated; but if the premium does not increase the value of the wheat in relation to other things, then no other inconvenience will assist it than that of paying the premium; the one I don't want to hide or underestimate.

Dr. Smith says that "by imposing high import duties and premiums on the export of corn, peasants appeared to have imitated the conduct of the manufacturers". By the same means, both had endeavored to increase the value of their products. "They may not have witnessed the great and essential difference that nature has made between corn, and almost all other types of goods. When, by any of the above means, you allow our manufacturers to sell their products at a price slightly better than they could otherwise get, you are not only increasing the nominal price, but the price real of these products. You are increasing not only the nominal, but the real profit, wealth and real income of these manufacturers - you really encourage these manufacturers. But when, by similar institutions, you increase the nominal or monetary price of corn, you do not increase its real value, you do not increase the real wealth of our farmers or our peasants, you do not encourage growth corn. The nature of things has given corn a real value, which cannot be changed by simply changing its price in cash. Across the world in general, this value is equal to the amount of work it can maintain. "

I have already tried to show that the price of corn on the market, under increased demand for the effects of a premium, would exceed its natural price, until the required additional supply was obtained, and that it would fall then at its natural price level. But the natural price of corn is not as fixed as the natural price of goods; because, with any significant additional demand for maize, poorer quality land must be cultivated, on which more labor will be needed to produce a given quantity, and the natural price of maize would increase. Therefore, a continued export premium for corn would create a tendency for the price of corn to go up constantly, and this, as I have shown elsewhere, 38 never fails to increase the rent. The peasants therefore have not only a temporary but permanent interest in the ban on the import of corn and in the premiums for its export; but manufacturers have no permanent interest in a premium on the export of goods, their interest is quite temporary.

An export premium for manufactured goods will no doubt increase, as Dr. Smith argues, the market price for manufactured goods, but it will not increase their natural price. The work of 200 men will produce double the amount of these goods that 100 could duce before; and therefore, when the required quantity of capital was employed to supply the required quantity of manufactured goods, they fell back to their natural price. It is only then during the interval following the rise in the market price of the basic products, and before the additional supply is obtained, that the manufacturers profit from high profits; because as soon as prices drop, their profits would drop to the general level.

Instead of agreeing, therefore, with Adam Smith, that the country gentlemen did not have as much interest in banning the importation of corn as the manufacturer had in banning the importation of manufactured goods, I submit that they have a much higher interest; because their advantage is permanent, while that of the manufacturer is only temporary. Dr. Smith points out that nature has made a great and essential difference between corn and other products, but the correct conclusion to be drawn from this circumstance is directly the opposite of what it draws from it; because it is because of this difference that the rent is created, and that the farmers have an interest in the rise of the natural corn prices. Instead of comparing the interest of the manufacturer to that of the country gentleman, Dr. Smith should have compared it to the interest of the farmer, which is very different from that of its owner. Manufacturers have no interest in raising the natural price of their primary commodities, nor farmers have any interest in increasing the natural price of corn or other raw products, although these two categories benefit while the price of the market for their products exceeds their natural price. On the contrary, the owners have a very determined interest in the increase in the natural price of corn; for the rise in rents is the inevitable consequence of the difficulty of producing raw products, without which its natural price could not increase. Now that export premiums and import bans on corn are increasing demand and pushing us to cultivate poorer land, it necessarily leads to increased production difficulties.

The only effect of the premium, either on the export of manufactured products or on maize, is to divert part of the capital towards a job which it would not naturally seek. This causes a pernicious distribution of the company's general funds - it bribes a manufacturer to start or continue in a comparatively less profitable job. It is the worst kind of taxation, because it does not give the foreign country everything it takes from the country of origin, the balance of the losses being constituted by the less advantageous distribution of general capital. Thus, if the price of corn is in England 4 l. , and in France 3 l. 15 s. a bonus of 10 s. will finally reduce it to 3 l. 10 s. in France, and keep it at the same price of 4 l. In England. For each quarter exported, England pays a tax of 10 s. For each quarter imported into France, France gains only 5 s. , so the value of 5 s. the quarter is absolutely lost to the world, by such a distribution of its funds that the result is a reduction in production, probably not of corn, but of some other object of necessity or enjoyment.

Mr. Buchanan seems to have seen the fallacy of Dr. Smith's arguments regarding premiums, and on the last passage I quoted, he very wisely remarks: "In asserting that nature has marked real valueon corn, which cannot be changed by simply changing its cash price, Dr. Smith confuses its value in use with its exchange value. A bushel of wheat will not feed more people during the scarcity than during the abundance; but a bushel of wheat will be exchanged for a greater quantity of luxuries and conveniences when it is scarce than when it is abundant; and the landowners, who have a surplus of food at their disposal, will therefore be, in times of scarcity, richer men; they will exchange their surplus for a greater value of other pleasures than when the corn is in greater quantity. It is therefore pointless to claim that if the premium results in a forced export of maize, it will also not lead to a real increase in prices. "The whole of Mr. Buchanan's arguments on this part of the subject of bonuses seem to me to be perfectly clear and satisfactory.

Mr. Buchanan, however, does not, I think, any more than Dr. Smith, or the writer of the Edinburgh Review, have correct opinions as to the influence of a rise in the price of labor on manufactured goods. From his particular views, which I have noticed elsewhere, he considers that the price of labor has nothing to do with the price of maize and that, therefore, the real value of maize could and would increase without affecting the price of labor; but if the work were affected, he would maintain with Adam Smith and the writer of the Edinburgh Review, that the price of manufactured goods would also increase; and then I do not see how he would distinguish such an increase in wheat from a fall in the value of money, nor how he could reach any other conclusion than that of Dr. Smith. In a note on page 276, vol. I. of the wealth of nations, observes Mr. Buchanan, "but the price of corn does not regulate the silver price of all the other parts of the raw products of the land. It does not regulate the price neither of metals, nor of various other useful substances , such as coals, wood, stones, etc., and since it does not regulate the price of labor, it does not regulate the price of manufactured goods ; so that the premium, to the extent that it increases the price corn, is undoubtedly a real advantage for the farmer. It is therefore not for this reason that his policy must be argued. His encouragement to agriculture, by increasing the price of corn, must be admitted; and the question then arises whether should agriculture be encouraged in this way? "- It is then, according to Mr. Buchanan, a real advantage for the farmer, because he does not increase the price of labor; but if he did, he would increase the price of all things in proportion, and it would then offer no particular encouragement to agriculture.

It must be admitted, however, that the tendency of an export premium for any commodity is to decrease the value of money to a small extent. Everything that facilitates export tends to accumulate money in a country; and on the contrary, everything that hinders export tends to decrease it. The general effect of taxation, by increasing the prices of taxed products, tends to decrease exports and therefore to curb the flow of money; and according to the same principle, a bonus encourages the inflow of money. This is explained in more detail in the general comments on taxation.

The deleterious effects of the mercantile system have been fully exposed by Dr. Smith; the overall objective of this system was to increase the price of raw materials on the market prohibit foreign competition; but this system did no more harm to the agricultural classes than to any other part of the community. By forcing capital to use channels where it would not otherwise flow, it has reduced the total amount of commodities produced. The price, although always higher, was not supported by scarcity, but by the difficulty of production; and therefore, although the sellers of these products sold them at a higher price, they did not sell them, after the required amount of capital was used to produce them, with higher profits. 39

The manufacturers themselves, as consumers, had to pay an additional price for these products, and therefore it cannot be correctly said that "the price increase caused by both (company laws and high duties on the import of foreign products) is everywhere ultimately paid by the owners, farmers and workers of the country. "

It is all the more necessary to make this remark, because nowadays the authority of Adam Smith is cited by country gentlemen to impose similar high duties on the importation of foreign corn. Because the costs of production, and therefore the prices of the various manufactured products, are raised for the consumer by an error of legislation, the country was called, on a call to justice, to be discreetly subjected to new abuses. Because we all pay extra price for our flax, muslin and cotton, we just think we should also pay an extra price for our corn. Because, in the general distribution of labor in the world, we have prevented the greatest quantity of productions from being obtained by this labor in manufactured products; we must punish ourselves more by reducing the productive powers of general labor in the supply of raw products. It would be much wiser to recognize the mistakes that a wrong policy prompted us to make and immediately begin to gradually return to the healthy principles of universal free trade.

"I have already had occasion to remark," observes Mr. Say, "in speaking of what is wrongly called the balance of trade, than if it is better for a trader to export the precious metals to a foreign country than any other good, it is also in the interest of the State that it exports them, because the State gains or loses only through the channel of its citizens; and as regards foreign trade , what works best for the individual, also works for the state; therefore, opposing export barriers that individualsto be inclined to make precious metals, nothing more is done, than to force them to substitute another commodity less profitable for themselves and for the State. It should be noted, however, that I say only with regard to foreign trade ; because the profits which the tradesmen make from their relations with their compatriots, as well as those which are carried out in the exclusive trade with the colonies, are not entirely gains for the State. In trade between individuals of the same country, there is no other gain than the value of a utility produced; That the value of a utility produced . " 40 Vol. ip 401. I don't see the distinction made here between the benefits of domestic and foreign trade. The goal of any trade is to increase production. If for the purchase of a wine pipe, I could export ingots bought with the product value of 100 working days, but the government, by prohibiting the export of ingots, should oblige me to buy my wine with a commodity bought with the value of the product of one hundred and five working days, the product of five working days is lost to me and, through me, to the State. But if these transactions took place between individuals, in different provinces of the same country, the same advantage would accrue both to the individual and, through him, to the country, if he were not free in his choice of products with whom he makes his purchases; and the same disadvantage, if he were obliged by the government to buy with the least advantageous merchandise. If a manufacturer could work with the same capital, more iron where the coals are plentiful, than it would do where the coals are scarce, the country would benefit from the difference. But if coals were scarce, and he imported iron, and could obtain this additional quantity, by the manufacture of a commodity, with the same capital and the same work, it would profit in the same way to his country from the additional quantity of iron. In the 6th Chap. of this work, I tried to show that any trade, foreign or national, is beneficial, by increasing the quantity, and not by increasing the value of the productions. We will have no greater value, whether we do the most advantageous internal and external trade, or because of being hampered by prohibitive laws, we are forced to settle for the least advantageous. The rate of profit and the value produced will be the same. The advantage is always resolved by what Mr. Say seems to confine to internal trade; in both cases there is no gain other than that of the value of a utility produced .

I t can - not be instructive to examine the effects of a premium on the generation of raw materials and other products based, in order to observe the principles that I have endeavored to establish, in which concerns stock profits, annual land and labor products, and relative prices of manufactured and raw products. Let us first assume that a tax has been imposed on all products, in order to raise a fund to be used by the government, by granting a premium on corn production . Since no part of such a tax would be spent by the government and everything that would be received from one category of people would be donated to another, the nation would not to be richer or poorer, of such a tax and such a premium. It would be readily accepted that the commodity tax by which the fund was created would increase the price of taxed products; all consumers of these products would therefore contribute to this fund; in other words, their natural or necessary price being increased, it would be the same for their market price. But for the same reason that the natural price of these products would increase, the natural price of corn would be lowered; before the premium was paid on production, the farmers obtained the price of their wheat as high as necessary to reimburse their rent and expenses and offer them the general rate of profit; after the premium, they would receive more than this rate, unless the price of corn drops by at least the premium. The tax and the premium would then have the effect of increasing the price of the goods to a degree equal to the tax collected on them and of lowering the price of corn by an amount equal to the premium paid. It will also be observed that no permanent change can be made to the distribution of capital between agriculture and manufacturing, because Without alteration, neither in capital nor in population, there would be precisely the same demand for bread and manufactured products. The farmer's profits would not be higher than the general level, after the fall in the price of maize; the manufacturer's profits would also not be lower after the rise in manufactured products; generosity would therefore not cause more capital to be used on the land for the production of corn, nor less for the manufacture of goods. But how would the owner's interest be affected? On the same principles as a raw product tax would reduce the corn rent from the land, leaving the money rent unchanged, a production premium, which is directly the opposite of a tax, would increase the corn rent, leaving the money rent unchanged. 41 With the same rent, the owner would have a higher price to pay for his manufactured products and a lower price for his wheat; he would therefore probably be neither richer nor poorer.

Now, if such a measure would have any effect on labor wages, depend on the question of whether the worker, by buying goods, would pay as much for the tax as he would receive from the premium, for the low price of his food. If these two quantities were equal, wages would remain unchanged; but if the goods taxed were not those consumed by the worker, his wages would fall, and his employer would benefit from the difference. But this is not a real advantage for his employer; it would indeed have the effect of increasing the rate of its profits, as every drop in wages must do; but to the extent that the worker contributed less to the fund from which the premium was paid and which, it should be remembered, had to be increased, his employer had to contribute more; in other words, he would contribute as much to the tax through his expenses as he would receive together from the effects of the premium and the higher rate of profit. He obtains a higher rate of profit to remunerate him, not only from his own tax quota, but also from that of his worker; the remuneration he receives for the quota of his worker results in a fall in wages or, which comes to the same thing, in an increase in profits; the remuneration of his clean appears in the decrease in the price of the wheat it consumes, resulting from generosity.

It should be noted here the different effects produced on profits by an alteration in the real value of the labor of maize, and an alteration in the relative value of maize, in taxation and in premiums. If the price of corn is lowered by a change in its labor price, not only will the rate of profit from the stock be changed, but so will absolute profits; which does not happen, as we have just seen, when the fall is caused artificially by a generosity. In the real fall in the value of corn, resulting from the fact that it takes less labor to produce one of the most important objects of human consumption, labor is made more productive. With the same capital, the same labor is employed, and this results in an increase in productions; not only then will the rate of profits, but the absolute profits of stocks will increase; not only will each capitalist have a higher monetary income, if he uses the same monetary capital, but also when this money is spent, he will procure for him a greater sum of goods; his pleasure will increase. In the case of the premium, to balance the advantage it derives from the fall of one commodity, it has the disadvantage of paying a more than proportionately high price for another; he receives an increased rate of profit to enable him to pay this higher price; so that his real situation did not improve in any way: although he obtained a higher rate of profit, he did not have greater control over the products of the land and the labor of the country. When the fall in the value of corn is caused by natural causes, it is not offset by the rise in other products; on the contrary, they fall from the raw material from which they come: but when the fall of the corn is caused by artificial means, it is always counteracted by a real increase in the value of another commodity, so that if the corn is bought cheaper, other products are bought more expensive.

This is further proof, that no particular inconvenience arises from taxes on necessities, due to the increase in wages and the fall in the rate of profit. The benefits are indeed reduced, but only up to the the part of the worker's tax, which must in any event be paid either by his employer or by the consumer of the worker's labor products. Whether you deduct 50 l. per year from the employer's income, or add 50 l. at the prices of the goods which he consumes, cannot have for him or for the community any other consequence than that which can also affect all the other classes. If it is added to the price of the goods, a miser can avoid the tax by not consuming; if it is indirectly deducted from each man's income, he cannot avoid paying his fair share of public charges.

A premium on maize production would then have no real effect on the country's annual land and labor products, although it would make corn relatively cheap and manufactured products relatively expensive. But now suppose that a contrary measure should be adopted, that a tax should be levied on corn in order to offer a fund for a premium on the production of goods.

In this case, it is obvious that the cornbe expensive, and cheap; the work would continue at the same price, if the worker benefited as much from the cheap commodity market as from the high cost of wheat; but if it were not, wages would rise and profits would fall, while the monetary rent would continue as before; profits would fall because, as we have just explained, it would be the mode by which the part of the workers in the tax would be paid by the employers. By increasing wages, the worker would be compensated for the tax he would pay on the increased price of wheat; by not spending any part of his salary on manufactured products, he would receive no part of the premium; the premium would be fully collected by the employers and the tax would be paid in part by the employees; remuneration would be paid to workers, in the form of wages, for this increased burden imposed on them, and thus the rate of profit would be reduced. In this case too, there would be a complicated measure producing no national result.

In examining this question, we haveleft aside our examination of the effect of such a measure on foreign trade; rather, we have assumed the case of an isolated country, having no commercial link with other countries. We have seen that, as the country's demand for corn and raw materials would be the same, whichever direction the premium might take, there would be no temptation to withdraw capital from one job. other: but this would no longer be the case if there were foreign trade, and this trade was free. By modifying the relative value of commodities and corn, having such a powerful effect on their natural prices, we should apply a strong stimulus to the export of products whose natural prices have been lowered, and a stimulus equal to l import of these products. whose natural prices have been increased, and such a financial measure could therefore completely modify the natural distribution of jobs; to the benefit of foreign countries, but ruinously to that where such an absurd policy was adopted.

This passage would naturally lead the reader to conclude that its author could not be mistaken about the nature of the rent, and that he mustsaw that the quality of land that the demands of society might require to be cultivated would depend on the " regular price of its products", if they were "sufficient to replace the stock, which must be used to cultivate them, together with ordinary profits . "

But he had adopted the notion that "there were certain parts of the earth's products for which demand should always be such as to offer a price higher than what was sufficient to place them on the market"; and he saw food as one of those parts.

He says that "the land, in almost all situations, produces a greater amount of food than is sufficient to maintain all the labor necessary to put it on the market, in the most liberal way this labor is never maintained. The surplus too is always more than enough to replace the stock that employed this labor, as well as its profits. So there is always something to rent to the owner. "

But what proof does he give? - noother than the assertion that "the most barren moors of Norway and Scotland produce a sort of pasture for cattle, the milk and increase of which is always more than enough, not only to maintain all the work necessary for to maintain them, and to pay the ordinary profit for the farmer or the owner of the herd or herd, but to pay a small rent to the owner. " Now, I may be allowed to maintain a doubt. I believe that in all countries, from the coarsest to the most refined, there is land of such quality that it cannot yield a product more than precious enough to replace the stock which is used there, as well as the profits ordinary and usual in this country. In America, we all know that this is the case, yet no one argues that the principles governing rents are different in this country and in Europe. But if it were true that England had so far advanced in cultivation, that at that time there was no more land left which could not afford to pay rent, it would also be true that there must have been formerly such lands; and whether or not it matters on this issue, because it is the same thing if there is capital employed in Great Britain on land which only returns shares with their ordinary profits, whether used on old or new land. If a farmer accepts a lease for seven or fourteen years for a piece of land, he can offer to use a capital of 10,000 l. knowing that at the current price of cereals and raw products, he can replace the part of his stock that he is obliged to spend, to pay his rent and to obtain the general rate of profit. It will not use 11,000 l. , unless the last 1000 liters. can be used productively to allow it the usual benefits of actions. In his calculation, whether he uses it or not, he considers only if the price of the raw products is sufficient to replace his expenses and his profits, because he knows that he will not have to pay any additional rent. Even at the end of his lease, his rent will not be increased; because if its owner had to demand a rent, because this supplement of 1000 l. was employed, he would withdraw it; since by using it, he obtains, by the supposition, only the ordinary and usual profits which he can obtain by any other use of stock; and therefore, he cannot afford to pay rent, unless the price of raw materials continues to rise, or, which it is the same thing, unless the usual and general rate of profit drops.

If the understanding of Adam Smith had been directed towards this fact, he would not have argued that rent is one of the components of the price of raw products; for the price is everywhere regulated by the yield obtained by this last portion of capital, for which no rent is paid. If he had asserted this principle, he would not have made any distinction between the law which regulates the rent for mines and the rent for land.

"The question of whether a coal mine, for example," he says, "can afford any rent, depends partly on its fertility and partly on its situation. A mine of any kind can be considered fertile or sterile, depending on the amount of minerals that can be brought in by a certain amount of work, is greater or less than what can be brought in by an equal amount of most of it '' other mines of the same kind. Certain coal mines, advantageously located, cannot be worked because of their sterility. The product does not pay the exthought. They cannot afford profit or rent. There are some, the product of which is scarcely sufficient to pay labor and replace, with its ordinary profits, the stock employed to work them. They provide some profit to the contractor, but no rent to the owner. They can only be carried out advantageously by the owner, who himself being the contractor, obtains the ordinary profit of the capital which he uses there. Many coal mines in Scotland are operated in this way and cannot be operated in any other. The landlord will not allow any other organization to work them without paying rent, and no one can afford it.

"Other coal mines in the same country, sufficiently fertile, cannot be exploited because of their situation. A quantity of minerals sufficient to cover labor costs, could be brought from the mine by the ordinary, or even less than the ordinary quantity of work, but in an interior country, sparsely inhabited, and without good roads or transport by water, this quantity could not be sold. "The whole principle of the rental is here admirably and visibly ex plain, but each word is as applicable to lands as to mines; however, he asserts that “it is different in the above ground areas. The proportion, both of their products and of their income, is proportional to their absolute value and not to their relative fertility ”. But suppose there is no land that has no rent; then, the amount of the rent on the worst land would be proportional to the excess of the value of the product over the capital expenditure and ordinary profits of the stock: the same principle would govern the rent of a quality land a little better, or more favorably situated, and therefore the rent of this land would exceed the rent of that which is lower by the superior advantages which it possessed; the same could be said of the third grade, and so on at best. Is it not then as certain that it is the relative fertility of the land that determines the portion of the product that must be paid for the rental of the land, as it is that the relative fertility of mines determines the portion of their product , who should be paid for the rent from the mines?

After Adam Smith said there are mines that cannot be minedby the owners, since they will only be able to afford the expenses of labor, as well as the ordinary profits of the capital employed, it must be expected that he will admit that it is these particular mines which regulate the price of the products. If the old mines are insufficient to supply the required amount of coal, the price of coal will rise and continue to rise until the owner of a new lower mine finds that he can obtain the usual profits from the stock by exploiting his mine. If his mine is fertile enough, the climb will not be great before it becomes his interest to use his capital in this way; but if it is less productive, it is obvious that the price must continue to increase until it gives him the means to pay his expenses and obtain the ordinary profits from the stock. It thus appears that it is always the least fertile mine which regulates the price of coal. Adam Smith, however, took a different view: he observed that "the most fertile coal mine also regulates the price of coal in all the other mines in its neighborhood. The owner and the contractor find, who can get a higher rent, the on the other hand, that he can get a greater profit, by somewhat under-selling all their neighbors. Their neighbors are soon forced to sell at the same price, although they cannot afford it, and although this always decreases, and sometimes takes away completely, both their rent and their profits. Some works are completely abandoned; others cannot afford any rent and can only be worked by the owner. "If the demand for coal were to decrease, or if by a new process the quantity was to increase, the price would fall and certain mines would be abandoned; but in any case, the price must be sufficient to pay the expenses and the profits of this mine that operates without paying rent. So the least fertile mine sets the price. This is what Adam Smith himself says in another place, because he says, "The price the lowest at which coals can be sold for a considerable time is like that of all other products, the price which is barely sufficient to replace, with its ordinary profits, the stock which must be used to bring them to market. In a coal mine for which the owner cannot obtain any rent, but which he must either work himself or leave alone all together, the price of coals should generally be roughly equal to this price. "

But the same circumstance, namely the abundance and the cheapness which results from it, whatever the cause, which would force to abandon the mines on which there is no rent, or very moderate, would do it, if there were the same abundance and the resulting cheap market for raw products, it was necessary to abandon the cultivation of land for which no rent was paid, or very moderate. If, for example, potatoes became the general and common food of the people, as rice is in some countries, a quarter, or half of the land currently cultivated, would probably be immediately abandoned; for if, as Adam Smith says, "an acre of potatoes will produce six thousand weights of solid food, three times the amount produced by an acre of wheat", there could not be for such a considerable time such a multiplication of people, consume the amount that could be harvested from the land before being used for growing wheat; a lot of land would therefore be abandoned, and the rent would drop; and it will only be when the population has been doubled or tripled that the same amount of land can be cultivated and that the rent will be paid as high as before.

No greater proportion of the gross product would be paid to the owner, whether it be potatoes, which would feed three hundred people, or wheat, which would feed only one hundred; because, although production costs would be greatly reduced if the worker's wages were mainly regulated by the price of potatoes and not by the price of wheat, and although consequently the proportion of total gross production after to have paid the workers, would have increased considerably, but no part of this additional proportion would be devoted to the rent, but the whole invariably to the profits, the profits being constantly increased when the wages fall and lowered when the wages increase. Whether wheat or potatoes are grown, the rent would be governed by the same principle - it would always be equal to the difference between the quantities of products obtained with equal capital, either on the same land or on land of different qualities. ; and therefore, while land of the same quality were cultivated and their relative fertility or their benefits were not modified, the rent would always have the same proportion compared to the gross product.

Adam Smith, however, argues that the proportion incumbent on the owner would be increased by a decrease in the cost of production and, therefore, that he would receive a larger share as well as a larger quantity, of an abundant product that little abundant. "A field of rice," he says, "produces much more food than the most fertile corn field." Two crops a year, thirty to sixty bushels each, would be the ordinary product of an acre. the cultivation therefore requires more work, a rest of the surplus much more after keeping all this work. In the rice countries therefore, where rice is the commune and the people's favorite vegetable food, and where the cultivators are mainly subsidized with it, an additional share of this larger surplus should belong to the owner than in the corn countries. . "

Mr. Buchanan also notes that "it is it is quite clear that if any other product which the land brought in more abundantly than corn became the common food of the people, the owner's rent would be improved in proportion to its greater abundance. "

If potatoes became the common food of the people, there would be a long interval during which the owners would suffer a huge rent deduction. They would probably not receive as much sustenance from man as they do now, while that sustenance would fall to a third of its present value. But all the manufactured products, on which part of the owner's rent is spent, would not suffer any other fall than that which would come from the fall of the raw material of which they were made, and which would only come from the highest fertility of the land , which could then be devoted to its production.

When, because of population growth, land of the same quality as before should be cultivated, to produce the necessary food, and the same number of men shouldTo be used to produce it, the owner would not only have the same proportion of the product as before, but this proportion would also have the same value as before. The rent would then be the same as before; however, the benefits would be much higher because the price of food, and therefore wages, would be much lower. High profits favor the accumulation of capital. The demand for labor would increase further and homeowners would continuously benefit from the increased demand for land.

The interest of the owner is always opposed to that of the consumer and the manufacturer. Corn can be permanently priced at an advanced price only because extra labor is needed to produce it; because its production cost is increased. The same cause invariably increases the rent, so it is in the owner's interest that the cost of producing corn be increased. It is not, however, in the interest of the consumer; for him, it is desirable that the corn is low compared to the money and the goods, because it is always with the goods or the money that one buys the corn. Nor is it the The manufacturer's interest that corn should be at a high price, because the high price of corn will lead to high wages, but will not increase the price of its merchandise. Not only then must we give more of his merchandise, or, what amounts to the same thing, the value of more of his merchandise, be given in exchange for the wheat he consumes himself, but we must give more, or the more value, for wages to his workers, for which he will receive no remuneration. Consequently, all classes, except the owners, will be harmed by the increase in the price of corn. Transactions between the owner and the public are not like commercial transactions, where the seller and the buyer can also be considered winners, but the loss is entirely on one side and the gain entirely on the other; and if corn by importation could be bought cheaper, the loss resulting from non-importation is much greater on the one hand than the gain on the other.

Adam Smith never distinguishes between a low monetary value and a high value of corn, and therefore deduces that the interest of the owner is not opposed to it.from the rest of the community. In the first case, the money is weak compared to all the products; in the other, corn is high compared to all. In the first, corn and commodities continue at the same relative value, in the second, corn is higher relative to commodities than to silver.

The following observation by Adam Smith is applicable to a low monetary value, but it is totally inapplicable to a high value of corn. "If (corn) imports were free at all times, our farmers and peasants would probably have a year-over-year, less money for their corn than they do now, while importing is mostly in force prohibited; but the money they get would be more valuable, buy more goods of all kinds, and employ more labor. Their real wealth, real income, therefore, would be the same as it is today, although they may be expressed in a smaller amount of money, and they would not be handicapped or discouraged from growing corn as much as they do today. like increasing the real value of money as a result of the silver price of corn, somewhat lowers the silver price of all other commodities, it gives industry in the country where it takes place some advantage in all foreign markets, and thus tends to encourage and to grow this industry. But the extent of the domestic corn market must be proportional to the general industry of the country where it grows, or the number of those who produce something else, to give in exchange for corn. But in all countries, the domestic market, because it is the closest and most convenient, is also the most important and important market for maize. This increase in the real value of money, which therefore has the effect of lowering the average price of maize in currency, tends to widen the largest and most important market for maize, and therefore to encourage, rather than discourage his growth. "

A high or low price of silver corn, resulting from the abundance and cheapness of gold and silver, is of no importance to the owner, as every type of product would be affected equally, just like Adam Smith describes it; but a relatively high price of corn is very beneficial to the owner at all times, as with the same amount of corn, it not only gives him control over a greater amount of money, but over a greater amount of each commodity that money can buy.

He also tried to show that this freedom of trade, which undoubtedly promotes the interest of the whole, also promotes that of each particular country; and that the the narrow policy adopted in the European countries with regard to their colonies is no less prejudicial to the cities themselves than to the colonies whose interests are sacrificed.

"The monopoly of the colonial trade," he said, "like all the other wicked and clever expedients of the mercantile system, depresses the industry of all the other countries, but mainly that of the colonies, without, at the very least, increasing, but on the contrary decreasing, that of the country in favor of which it is established. "

This part of his subject, however, is not treated as clearly and convincingly as that in which he shows the injustice of this system towards the colony.

Without asserting or denying that the current practice of Europe with regard to their colonies is detrimental to the mother countries, I am entitled to doubt that a mother country may sometimes not benefit from the restrictions to which it subjects its colonial possessions . Who can doubt, for example, that if England were the colony of France, the latter country would benefit from a generous premium paid by England for the export of corn, cloth or other products? By examining the question of premiums, supposing that the corn is at 4 l. per quarter in this country, we have seen, that with a premium of 10 s. per quarter, for export to England, maize would have been reduced to 3 l. 10 s. In France. Now, if the corn had previously been 3 l. 15 s. per quarter in France, French consumers would have benefited from 5 s. per quarter on all imported corn ; if the natural price of corn in France was before 4 l. , they would have won the entire 10 sec bonus . by quarter. France would thus benefit from the loss suffered by England: it would not only gain part of what England lost, but in some cases the whole.

It can, however, be said that an export premium is a measure of domestic policy and could not be easily imposed by the mother country.

If it suited the interests of Jamaicaand Holland to exchange the goods which they produce respectively, without the intervention of England, it is quite certain that by preventing them, the interests of Holland and Jamaica would suffer; but if Jamaica is obliged to send its goods to England and to exchange them for Dutch goods, an English capital or an English agency will be employed in a trade in which it would not be otherwise engaged. He was won over by a premium, not paid by England, but by Holland and Jamaica.

Adam Smith himself said that the loss suffered as a result of an unfavorable division of labor in two countries could be beneficial for one of them, while the other would suffer more than the loss which actually belongs to such a distribution. which, if it is true, will immediately prove that a measure, which can be very prejudicial to a colony, can be partially beneficial for the mother country.

Speaking of trade treaties, he says: "When a nation is bound by treaty, eitherto allow the entry of certain goods from a foreign country which it prohibits all others, or to exempt the goods of a country from the duties to which it subjects those of all others, of the country, or at least The country's merchants and manufacturers, whose trade is so favored, must necessarily derive a great advantage from the treaty. These merchants and manufacturers enjoy a kind of monopoly in the country, which is so lenient to them. This country becomes both a larger and more profitable market for their goods; more extensive, because the goods of other nations, being either excluded or subject to heavier rights, it takes off a greater quantity; more advantageous, for the merchants of the favored country, who enjoyed a sort of monopoly there, often sold their goods at a better price than if they were exposed to the free competition of all other nations. "

That the two nations, between which the commercial treaty is concluded, are the mother country and her colony, and Adam Smith, it is obvious, admits, that a mother country can benefit from the oppression of her colony.However, it can again be noted that, unless the monopoly of the foreign market is in the hands of an exclusive company, buyers of foreign products will not pay more for goods than buyers of houses; the price they will both pay will not differ much from their natural price in the country where they are produced. England, for example, may, under ordinary circumstances, always buy French products, at the natural price of these products in France, and France would have an equal privilege to buy English products at their natural price in England. But at these prices, the goods would be purchased without a treaty. What advantage or disadvantage does the treaty then have for one or the other of the parties?

The disadvantage of the treaty for the importing country would be the following: it would oblige it to buy a commodity, from England for example, at the natural price of this commodity in England, whereas it could perhaps have bought it much lower natural price from another country. It then causes a disadvantageous distribution of the general capital, which is mainly the responsibility of the country bound by its treaty to buy on the least productive market ; but it gives no advantage to the seller because of a supposed monopoly, because it is prevented by competition from its own compatriots from selling its goods above their natural price; where he would sell them, whether he exports them to France, Spain or the Antilles, or sells them for domestic consumption.

What then is the advantage of the stipulation of the treaty? It consists of this: these particular goods could not have been manufactured in England for export, but for the privilege which it alone had to serve this particular market; because competition from this country, where the natural price was lower, would have deprived it of any chance of selling these products. This, however, would have been of little importance, if England had been certain that she could sell at the same amount any other good she could manufacture, either on the French market, or with an equal advantage over any that the other. The objective of England is, for example, to buy a quantity of French wines worth 5000 l. - she then wishes to sell somewhere where she can get 5000 l. for this reason. If France grants it the monopoly of the canvas market, it will gladly export canvas for this purpose; but if trade is free, competition from other countries may prevent the natural price of fabric in England from being low enough to enable it to obtain 5000 l. by the sale of fabric, and to obtain the usual profits by such use of its stock. The industry of England must then be employed on some other commodity; but it may be that none of its productions can, at the present value of silver, afford to sell at the natural price of other countries. What is the consequence? Wine drinkers in England are always ready to give 5000 l. for their wine, and therefore 5000 l. silver is exported to France for this purpose. By this export of money, its value increases in England and decreases in other countries; and with it the natural price of all the basic products produced by British industry is also lowered. The rise in the price of silver is the same as the fall in the price of raw materials. To obtain 5000 l. , British products can now be exported; at their reduced natural price they can now compete with products from other countries. However, more goods are sold at low prices to obtain the 5000 l. kits, which, once obtained, will not provide the same amount of wine; for, while the fall in money in England lowered the natural price of goods there, the increase in money in France caused the natural price of goods and wine to rise in France. Less wine will then be imported into England, in exchange for its goods, when trade is perfectly free, than when it is particularly favored by trade treaties. The rate of profit will not have varied, however; the currency will have changed in relative value in the two countries, and the advantage that France will have obtained will be to obtain a greater quantity of English, in exchange for a given quantity of French products, while the loss suffered by England will consist in obtaining a smaller quantity of French goods in exchange for a given quantity of those of England.

Foreign trade, whether hampered, encouraged or free, will therefore continue, regardless of the relative difficulty ofproduction in different countries; but it can only be regulated by changing the natural price, not the natural value at which goods can be produced in these countries, and this is done by changing the distribution of precious metals. This explanation confirms the opinion I have expressed elsewhere, according to which there is no tax, premium or ban on importing or exporting products which does not lead to a different distribution of precious metals. and which therefore does not change both the natural price and the market price of basic products everywhere.

It is therefore obvious that trade with a colony can be regulated so as to be both less beneficial for the colony and more beneficial for the metropolis than perfectly free trade. As it is disadvantageous for a single consumer to be limited in its transactions to a particular store, it is also disadvantageous for a nation of consumers to be forced to buy from a particular country. If the store or country offered the cheapest products, they would be sure to sell them without any this exclusive privilege; and if they did not sell for less, the general interest would require that they should not be encouraged to pursue a trade which they could not exercise on an equal basis with the others. The store, or the seller country, could lose because of the change of employment, but the general advantage is never as fully guaranteed as by the most productive distribution of general capital; that is, by universal free trade.

An increase in the production cost of a product, if it is an essential item, will not necessarily decrease its consumption; for although the general power of buyers to consume is diminished by the increase of any commodity, they may forgo the consumption of another commodity whose cost of production has not increased. In this case, the quantity delivered will be in the same proportion of demand as before; only the cost of production will have increased, and yet the price will increase, and must increase, to place the profits of the producer of the improved commodity at the level of profits from other trades.

Say says that cost of production is the foundation of price, yet in various parts of his book he argues that price is regulated by the proportion demand brings to supply. The real and ultimate regulator of the relative value of any two products is the cost of their production, and neither the respective quantities that can be produced, nor the competition between buyers.

According to Adam Smith, the colonial trade, being a trade in which only British capital can be employed, has increased the rate of profit of all other trades; and since, according to him, high profits and high wages drive up the prices of goods, the monopoly of the commerce of the colonies was, according to him, prejudicial to the metropolis; because it diminished its power to sell manufactured goods as cheaply as other countries. He says that "as a result of the monopoly, the increase in trade in the colonies did not so much add to the trade that Britain had before, as a total change in its direction. Second, this monopoly necessarily contributed to maintain the rate of profit in all the different branches of British commerce, higher than it would have been naturally, if all nations had been allowed free trade with the British colonies. "" But anything that increases the rate of ordinary profit in any country higher than it would otherwise necessarily subject that country to both an absolute disadvantage and a relative disadvantage in all branches of trade which it does not has no monopoly. This puts her at an absolute disadvantage, because in such branches of trade, her traders cannot obtain this greater profit without selling more expensive than they would otherwise do, both the goods from foreign countries which they import in their own country and goods from their own country which they export to foreign countries. Their own country must both buy and sell at a higher price; must both buy less and sell less; must both enjoy less and produce less than it would otherwise. "

"Our merchants frequently complain of the high wages of British labor as the cause of the under-sales of their manufactured goods in foreign markets; but they say nothing about the high profits of the stocks. They complain of theextravagant gain from others, but they say nothing about them. The high profits from British stocks, however, can help raise the price of British manufacturing in many cases as much, and in some perhaps more, than the high wages of British labor. "

I allow the monopoly of the commerce of the colonies to change, and often in a detrimental manner, the direction of capital; but from what I have already said about profits, it will be seen that any change from one foreign trade to another, or from internal trade to foreign trade, cannot, in my opinion, affect the rate of profits . The harm suffered will be what I have just described; the distribution of capital and industry in general will be worse and, as a result, production will be lower. The natural price of commodities will increase and, therefore, although the consumer can buy at the same monetary value, he will get fewer commodities. We will also see that if it even had the effect of increasing profits, it would not cause the slightest alteration in prices; prices being governed neither by wages nor by profits.

And Adam Smith does not agree in this opinion, when he says, that "the prices of goods, or the value of gold and silver, in relation to goods, depend on the proportion between the quantity of work that is necessary to bring a certain amount of gold and silver to the market, and what is necessary to bring a certain amount of other goods into it? " This quantity will not be affected, whether the profits are high or low, or low or high wages. How then can prices be increased by high profits?

Granting a moment that this was true; what would be the advantage for a country of employing a large quantity of productive labor, if it employed this quantity or less, its net rent and its profits together were the same. The set of products of the land and labor of each country is divided into three parts; of these, part is devoted to wages, another to profits and the other to rental. It is from the last two portions only, that all deductions can be made for taxes, or for savings; the former, although moderate, still constitute the necessary production expenses. To an individual, with a capital of 20,000 l. , whose profits were 2000 l. per year, it would be quite indifferent to know whether its capital would employ a hundred or a thousand men, if the goods produced sold for 10,000 l. , or for 20,000 l. , provided that, in all cases, its profits have not fallen below 2000 l. Isn't the true interest of the nation similar? As long as its real net income, its rent and its profits are the same, it does not matter whether the nation is made up of ten or twelve million inhabitants. Its power to support fleets and armies, and all kinds of unproductive labor, must be proportional to its net, not proportionate to its gross income. If five million men could produce as much food and clothing as necessary for ten million, food and clothing for five million would constitute net income. Would it be advantageous for the country if seven million men were needed to produce this same net income, that is to say that seven million were employed to produce food and clothing sufficient for twelve million? Food and tissue five million would still constitute net income. The employment of a larger number of men would neither allow us to add a man to our army and our navy, nor to contribute one more Guinea to taxes.

It is not on the basis of any supposed advantage from a large population, or the happiness which a greater number of human beings can enjoy, that Adam Smith supports the preference of this use of capital, which moves the largest quantity of industry, but expressly because of the increase in the power of the country; because he says that "wealth, and, to the extent that power depends on wealth, the power of each country must always be proportional to the value of its annual products, the fund from which all taxes must ultimately be paid" . However, it must be obvious that the power to pay taxes is proportional to the net and not proportional to gross income.

In the distribution of jobs among all countries, the capital of the poorest countries will naturally be used in these activities, wherea large amount of work is taken care of at home, since in these countries the food and products necessary for a growing population can be obtained most easily. In rich countries, on the contrary, where food is expensive, capital naturally flows, when trade is free, in professions where the least amount of work must be kept at home: like the portage trade, the foreigner distant commerce, where profits are proportional to capital and not proportional to the quantity of labor employed. 43

Although I admit that, because of the nature of the rent, a given capital employed in agriculture, on anything other than the last cultivated land, sets in motion a greater quantity of labor than a the capital employed in manufactured products and trade, but I cannot admit that there is a difference in the quantity of labor employed by a capital engaged in internal trade and an equal capital engaged in external trade.

"The capital which sends Scottish factories to London and brings back corn and English factories to Edinburgh", says Adam Smith, "necessarily replaces, by each of these operations, two British capitals which had both been employed in agriculture or the factories of Great Britain. .

"The capital used to buy foreign goods for domestic consumption, when this purchase is made with the products of the national industry, also replaces, by each of these operations, two distinct capital; but only one of them is employed to support the national industry. The capital which sends British goods to Portugal and brings back Portuguese goods to Great Britain, replaces, by each of these operations, only one British capital, the other is Portuguese. of consumption foreign trade should therefore be as fast as home trade, the capital which is employed there will give only half of the incentives to industry or to the productive workforce of the country. "

This argument seems to me fallacious; for, although two capitals, one Portuguese and one English, are employed, as Dr Smith assumes, a capital will still be employed in foreign trade, double what would be employed in internal trade. Suppose that Scotland uses a capital of a thousand pounds to make flax, which it exchanges for the product of a similar capital used to make silks in England. Two thousand pounds and a proportional amount of labor will be employed by the two countries. Suppose now that England discovers that it can import more flax from Germany for the silks it previously exported to Scotland and that Scotland discovers that it can obtain more flax from France in exchange for its linen than 'she had never obtained one before from England. , - England and Scotland will they not immediately cease to trade between them, and will the internal trade of consumption not be changed for an external trade of consumption? But although two addi the national capitals will enter into this trade, the capital of Germany and that of France, will not continue to employ the same quantity of scotch and English capital, and will not give movement to the same quantity of industry as when was she engaged in internal trade?

Gold and silver, like all other commodities, have value only in proportion to the amount of labor required to produce and place them on the market. Gold is about fifteen times more expensive than silver, not because there is greater demand, nor because the supply of silver is fifteen times that of gold, but only because that fifteen times the quantity of work is necessary to obtain a given quantity.

The amount of silver that can be used in a country must depend on its value: if gold alone was used for the circulation of goods, a quantity would be required, only one fifteenth of what would be necessary, if silver was used for the same purpose.

Circulation can never be as abundant as it overflows; for by decreasing its value, in the same proportion, you will increase its quantity, and by increasing its value, you will decrease its quantity. 44

While the state puts money and charges no seigniorage, silver will have the same value as any other coin of the same metal of equal weight and fineness; but if the State invoices a seigniorage for the currency, the coin invented will generally exceed the value of the metal piece not joined by the whole seigniorage invoiced, because it will require a greater quantity of work, or, which is the same thing, the value of the product of a greater amount of labor, to obtain it.

While the state only coins, there can be no limit to this accusation of seigniorage; because by limiting the quantity of coins, it can be raised to any imaginable value.

It is on this principle that paper money circulates: the entire price of paper money can be considered as seigniorage. Although it has no intrinsic value, however, by limiting its quantity, its exchange value is as great as an equal denomination of coin or ingot in that coin. On the same principle also, namely, by limiting its quantity, a degraded piece would circulate at the value it should have, if it had the legal weight and finesse, and not at the value of the quantity of metal which it actually contained. In the history of British money, we therefore find that currency has never been depreciated in the same proportion as it has been degraded; the reason was that it was never multiplied in proportion to its diminished value. 45

After the creation of banks, the state does not have the exclusive power to forge or issue money. Currency can be increased by paper as well as by coin; so that if a state were to lower its money and limit its quantity, it could not sustain its value, because the banks would have equal power to increase the total amount of circulation.

On these principles, we will see that it is not necessary that paper money be payable in cash to guarantee its value; it suffices that its quantity be adjusted according to the value of the metal declared as a standard. Yes the standard was gold of a given weight and fineness, the paper could be increased with each fall in the value of gold, or, which is the same thing in its effects, with each increase in price of goods.

"By issuing too much paper," says Dr. Smith, "whose surplus kept coming back to be exchanged for gold and silver, the Bank of England was, for many years together forced gold coins up to eight hundred thousand pounds and a million a year, or on average about eight hundred and fifty thousand pounds. For this great currency, the Bank, due to the worn and degraded condition into which the gold coin had fallen a few years ago, was often forced to buy bullion, at the high price of four pounds an ounce, which he soon after issued in coins at 3 l. 17 s . 10½ d. per ounce, losing between two and a half and three per cent. on the currency of such a large sum. Although the Bank has therefore not paid seignorage, though the government was properly at the expense of money, this li The government's lacklusterness did not completely prevent the Bank from spending. "

On the principle stated above, it seems clear to me, that by not reissuing the paper thus brought, the value of the whole currency, of the degraded currency as well as of the new gold coin, would have been increased; when all requests to the Bank have ceased.

Buchanan, however, disagreed because he said, "that the great expense to which the Bank was exposed at that time was not incurred, as Dr. Smith seems to imagine , by an imprudent question of paper, but by the degraded state of the currency, and the high price of the ingots which results from it. The Bank, it will be noticed, having no other means of obtaining46 guineas but by sending ingots mint to invent, has always been forced to issue new invented guineas, in exchange for its returned notes; and when the currency was generally in deficit and the price of bullion was high in proportion, it became profitable to draw these heavy guineas from the Bank in exchange for its paper; to convert them into ingots and to resell them with a profit for bank paper, to be returned to the Bank for a new supply of guineas, which were again melted and sold. The bank must always be exposed to this flow of cash when the currency is deficient, because both an easy profit and a certain profit result from the constant exchange of paper for cash. It can however be noted that, whatever the inconveniences and the expenses to which the Bank was exposed by the exhaustion of its kind, it was never considered necessary to lift the obligation to pay money for its notes . "

Dr. Smith seems to have forgotten his own principle in his argument about colonial money. Instead of attributing the depreciation of this paper to its excessive abundance, he asked whether, allowing the security of the colony to be perfectly good, a hundred pounds, payable in fifteen years, would also be valid with a hundred pounds to pay immediately? I answer yes, if it is not too abundant.

However, experience shows that neither a state nor a bank has ever had unlimited power to issue paper money, without abusing it: in all states, the question of paper money should therefore beunder control and control; and none seems as appropriate for this purpose as that of submitting paper money issuers to the obligation to pay their notes, either in gold coins or in ingots.

A currency is in its most perfect state when it is entirely made up of paper money, but paper money of a value equal to the gold it claims to represent. The use of paper instead of gold replaces the cheapest instead of the most expensive medium and allows the country, without loss for anyone, to exchange all the gold it had previously used for this purpose, against raw materials, utensils and food. , by the use of which increase both its wealth and its enjoyments.

From a national perspective, it does not matter that the issuers of this well-regulated paper money, be it the government or a bank, on the whole it will be as productive of wealth as it is issued by one or by the other; but it is not the same for the interests of individuals. In a country where the market interest rate is 7% and the state requires a special costs 70,000 l. per year is a matter of importance for individuals in this country, if they have to be taxed to pay these 70,000 l. per year, or if they could increase it without taxes. Suppose that a million dollars is needed to equip an expedition. If the state issued a million pieces of paper and moved a million pieces, the expedition would be equipped at no cost to the people; but if a bank issued a million paper and lent it to the government at 7 per cent, thus displacing a million coins, the country would be liable for a continuous tax of 70,000 l. per year: the people would pay the tax, the bank would receive it and the society would in both cases be as rich as before; the expedition would have been really arranged by the improvement of our system, by making the capital, worth a million, productive in the form of goods, instead of leaving it unproductive in the form of parts; but the advantage would still be in favor of paper issuers; and since the state represents the people, the people would have saved the tax if they, not the bank, had issued this million.

I have already observed that if there were perfect security that the power to issue paper money would not be abused, it would have no importance as regards the wealth of the country collectively, by whom it was issued ; and I have now shown that the public would have a vested interest in the issuers being the state and not a trading or banker company. The danger, however, is that this power is more likely to be misused if it is held by the government than by a banking company. It is said that a business would be more under the control of the law, and although it may be in their interest to extend their problems beyond the bounds of discretion, they would be limited and controlled by the power that would have individuals to call ingots. or species. It is argued that the same check would not be honored for long if the government had the privilege of issuing money; that they would be too apt to consider the present convenience rather than the future security and could thus, for reasons presumed of expediency, be too inclined to delete the checks, by which the amount of their emissions was controlled.

Under an arbitrary government, this objection would have great force, but in a free country, with an enlightened legislature, the power to issue paper money, under the requisite convertibility checks at the holder's will, could be deposited in full security in the hands of commissioners appointed for this special purpose, and they could become completely independent of the control of ministers.

The sinking fund is managed by commissioners, accountable only to Parliament, and the investment of the money entrusted to them takes place with the greatest regularity; What reason is there to doubt that the issues of paper money can be settled with the same fidelity, if they are placed under a similar management?

It can be said that, although the advantage accruing to the State, and therefore to the public, of the issue of paper money, is sufficiently manifest, because it would exchange part of the national debt, on which interest is paid by the public, in an interest-free debt, but it would be disadvantageous for the trade, because it would prevent merchants to borrow money and obtain a discount on their invoices, a method by which bank paper is partly issued.

However, this assumes that money cannot be borrowed if the Bank does not lend it and that the market interest and profit rate depends on the amount of money issued and the channel through which it is issued. . But as a country would not run out of cloth, wine or any other commodity, if it could afford to pay it, in the same way there would be no deficit of money to lend, if the borrowers offered good security, and were willing to pay the market interest rate for it.

In another part of this work, I have tried to show that the real value of a commodity is regulated, not by the accidental advantages from which some of its producers can benefit, but by the real difficulties encountered by this least favored producer . This is so with regard to interest in money; it is not regulated by the rate at which the Bank will lend, whether either 5, 4 or 3 per cent., but by the rate of profit, which can be realized by the use of capital, and which is totally independent of the quantity or value of money. Whether a bank lends a million, ten million or a hundred million, it would not permanently change the market interest rate; they would only change the value of the money thus issued. In one case, 10 to 20 times more money could be needed to run the same business than what might be required in the other. Requests for money from the Bank therefore depend on the comparison between the rate of profit which can be realized by its use and the rate at which they are ready to lend it. If they charge less than the market interest rate, there is no money they could not lend, if they charge more than this rate, we would only find spendthrift and wonders at borrow. So we find that when the market interest rate exceeds the rate of 5 percent. to which the Bank uniformly lends, the discount office is besieged with money seekers; and, on the contrary, when the market rate is even temporarily less than 5%. the clerks in this office are unemployed.

The reason why, for the past twenty years, the Bank has given so much aid to trade, by helping traders with money, is because they have, during this whole period, lent money below the market interest rates; below this rate at which merchants could have borrowed elsewhere; but I admit that it seems to me rather an objection to their establishment, than an argument in its favor.

What about an establishment that should regularly supply half of the drapers with their wool at market prices? What would be the benefits for the community? This would not prolong our trade, because the wool would also have been purchased, if they had charged the market price. That would not lower the price of the fabric for the consumer, because the price, as I said before, would be regulated by the cost of its production for those who would be the least favored. Its only effect would then be inflate the profits of a part of the clothiers beyond the general and common rate of profits. The establishment would be deprived of its equitable benefits and another part of the community would benefit to the same extent. This is precisely the effect of our banking establishments; an interest rate is fixed by law below that at which it can be borrowed on the market, and at this rate the Bank is required to lend or not to lend at all. By the nature of their establishment, they have significant funds which they can only dispose of in this way; and a part of the traders of the country are unjustly, and for the country without profit, took advantage of the possibility of providing themselves a commercial instrument, at a price lower than those which must be influenced only by the market price.

The whole enterprise, which the whole community can exercise, depends on the amount of capital, i.e. its raw material, its machines, its food, its ships, etc., used in production . Once a well-regulated paper money is established, it cannot be increased or decreased by the operations of banking. If the State then issued the country's paper money, although it should never discount a banknote or lend a shilling to the public, there would be no change in the amount of trade; because we should have the same amount of raw materials, machinery, food and ships; and it is also likely that the same amount could be lent, not 5%. indeed, a rate fixed by law, but at 6, 7 or 8 per cent., the result of fair competition in the market between lenders and borrowers.

Adam Smith talks about the advantages for merchants of the superiority of the Scottish mode of offering accommodation for trade, compared to the English mode, through cash accounts. These cash accounts are credits granted by the Scottish banker to his customers, in addition to the invoices which he discounts for them; but as the banker, to the extent that he advances money and puts it into circulation in one way, is prevented from emitting so many things from the other, it is difficult to see what the advantage consists of. If all the traffic will carry only one mil paper lion, only one million will be distributed; and it cannot have any real importance either for the banker or for the merchant, whether the whole is issued in the form of a discount or that a part is issued, and the rest is issued by means of these cash accounts.

It may be necessary to say a few words about the two metals, gold and silver, which are used in money, especially since this question seems to disturb the minds of many people. clear and simple principles of money. "In England," says Dr. Smith, "gold was not considered legal tender for a long time after it was invented in silver. The proportion between the values of gold and silver was not fixed by any law or public proclamation; but it remained to be settled by the market. If a debtor offered a payment in gold, the creditor could either reject this payment completely, or accept it for such a valuation of gold, like him and its debtor could agree. "

In this state of affairs, it is obvious that aGuinea can sometimes spend 22 s. or more, and sometimes for 18 s. or less, entirely depending on the change in the relative market value of gold and silver. All variations in both the value of gold and the value of silver would be noted in the gold coin, it would seem that silver is invariable and that gold alone is subject to rising or falling the drop. Thus, although a Guinea passed for 22 s. instead of 18 s. gold might not have varied in value, the variation could have been entirely limited to silver, and therefore 22 s. could not have been more valuable than 18 s. were before. And on the contrary, all the variation could have been in gold: a guinea, which was worth 18 s. could have reached the value of 22 s.

If we now assume that this silver currency is degraded by clipping and also increased in quantity, a guinea could pass for 30 s. ; for the money in 30 s. of such degraded currency might not be worth more than gold in a guinea. By restoring money money to its money value, money money would increase; but it seems that gold has fallen, for a Guinea probably wouldn't be worth more than 21 of these good shillings.

If now gold were also legal tender, and each debtor would be free to discharge a debt by the payment of 420 shillings, or twenty guineas, for 21 liters. that he owes, he will pay one or the other according to whether he will be able to discharge his debt the cheapest. If, with five quarts of wheat, he can get as many gold bars as mint will sell in twenty guineas, and for the same wheat as many silver bars as mint will cost him in 430 shillings, he will prefer to pay in money, because he would earn ten shillings by thus paying his debt. But if, on the contrary, he could obtain with this wheat as much gold as one would have invented in twenty and a half guineas, and as much money as coins in 420 shillings, he would naturally prefer to pay his debt in gold. If the quantity of gold which he could procure could only be invented in twenty guineas, and the quantity of silver in 420 shillings, it would be a perfect indifference for him in which the money, the money or the 'was that he was paying his debt. So it's not a question luck; It is not because gold is better suited to the circulation of a rich country that gold is always preferred to pay debts; but simply because it is in the interest of the debtor to pay them.

For a long time before 1797, the year of the restriction of bank payments in coins, gold was so cheap compared to silver that it suited the Bank of England and all others debtors to buy gold on the market, and no money, in order to bring it to mint to invent, as they could in this invented metal cheaply debts. Silver money was for a large part of this period very degraded, but it existed to a certain extent of scarcity, and therefore according to the principle that I explained previously, it never dropped in its current value. Although if degraded, the debtors still had an interest in paying the gold coin. If indeed the quantity of this damaged silver coin had been extremely large, or if the currency had issued such damaged coins , it might have been in the interest of the debtors to pay in this damaged money; but its quantity was limited and it maintained its value, and there Gold was in practice the real monetary standard.

That it is so, it is not the case; but it has been argued that this was done by law which declared that money should not be legal tender for any debt greater than 25 l. , except by weight, according to the mint standard.

But this law did not prevent any debtor from paying a debt, however important it was, in money money; that the debtor did not pay in this metal, it was not a question of chance, nor of constraint, but quite the effect of the choice; it didn't suit him to take mint money, it suited him to take gold there. It is probable that if the quantity of this damaged money in circulation had been enormously great, and also a legal tender, that a guinea would have been worth thirty shillings again; but it would be the degraded shilling which would have lost its value, and not the Guinea which had risen.

It then appears that if each of the twometals were also legal tender for debts of any amount, we were subject to a constant change from the main standard measure of value. Sometimes it would be gold, sometimes silver, depending entirely on changes in the relative value of the two metals, and at that time the metal, which was not the norm, would be melted and removed from the circulation, because its value would be more in bullion than in coins. This was an inconvenience which it was highly desirable to remedy, but the progress of improvement is so slow that, although it has been demonstrated irrefutably by Mr. Locke, and that all writers have spoken of it since his time , a better system was never adopted until the last session of Parliament, when it was promulgated that gold alone should be legal tender for any sum exceeding forty-two shillings.

Dr. Smith does not seem to have been fully aware of the effect of the use of two metals as currency, and at the same time of a legal tender for debts of any amount; because he says that "in reality, for the duration of one regulated proportion between the respective values of the different metals in the coin, the value of the most precious metal regulates the value of the whole coin. "Because gold was in his time the means by which debtors were to pay their debts, he believed that it had some inherent quality by which it did so then, and would always regulate the value of silver coins.

During the reformation of the gold coin in 1774, a new Guinea fresh out of the currency would only exchange twenty-one degraded shillings; but under the reign of King William, when the silver coin was in precisely the same condition, an equally new and fresh guinea of the coin would exchange for thirty shillings. On this M. Buchanan observes, "here, then, is a very singular fact, of which the common theories of currency offer no account; Guinea exchanging at a given moment for thirty shillings, its intrinsic value in a currency of degraded money, and after the same guinea only exchanged for 21 of these degraded shillings. It is clear that a great change must have intervened in the state of money between these two different periods, of which Dr. Smith's hypothesis offers no explanation. "

It seems to me that the difficulty can be solved very simply, by referring this state different from the value of Guinea to the two periods mentioned, to the different quantities of degraded money in circulation. During the reign of King William, gold was not legal tender, it only went to a conventional value. All of the large payments were probably made in cash, particularly in paper money, and there was little understanding of banking . The quantity of this degraded silver money exceeded the quantity of silver money, which would have been kept in circulation, if nothing but unfounded money had been used; and consequently, it has been depreciated as well as degraded. But during the next period, when gold was legal tender, when banknotes were also used to make payments, the amount of money in spoiled money did not exceed the amount of silver coins fresh out money, which would have circulated if there had been no money in degraded money; so good the money has been lowered, it has not been written off. Mr. Buchanan's explanation is somewhat different, he thinks that a subsidiary currency is not liable to depreciation, but that the main currency is. During the reign of King William, silver was the main currency and was therefore susceptible to depreciation. In 1774 it was a subsidiary currency and therefore retained its value. Depreciation, however, does not depend on the currency or the main currency, it depends entirely on its excess quantity.

To a moderate seigniorage on the currency, there cannot be much objection, in particular on this currency which must make the small payments. The money is generally valued at the total amount of the seigniorage, and it is therefore a tax that does not affect those who pay it, while the amount of money is not in excess. It should be noted, however, that in a country where paper money is established, although the issuers of that paper should be required to pay it in cash at the request of the holder, however, both their notes and the coin could be written off to the total amount seigniorage on this coin, which is the only legal tender, before the check, which limits the circulation of paper, operates. If the seigniorage on the gold coin was 5%, for example, the currency, by an abundant issue of banknotes, could be really depreciated by 5%. before, it would be in the interest of the holders to demand coins to melt them in ingots; a depreciation to which we would never be exposed if there were no seigniorage on the gold coin; or, if seigniorage was authorized, holders of banknotes could demand ingots, and not coins, in exchange for these, at the new price of 3 l. 17s . 10½ d. Unless the bank is obliged to pay their notes in ingots or coins, at the will of the holder, the late law which authorizes a seigniorage of 6 percent., Or four pence per ounce., On the silver coin , but which orders that gold be invented by money at no cost, this is perhaps the most appropriate, as this will more effectively prevent unnecessary variation in money. 47

But corn is a commodity, like gold, silver and other things; if all the products therefore have a high tradable value in a rich country, maize should not be excluded; and therefore we could rightly say that the corn was exchanged for a lot of money, because it was expensive, and that money also exchanged for a large amount of corn, because that too was expensive; is to say that corn is expensive and cheap at the same time. No point in political economy can be better established than the fact that a rich country cannot increase its population, in the same proportion as a poor country, by the progressive difficulty of providing food. This difficulty must necessarily increase the relative price of foodstuffs and encourage their importation. How then can silver, gold and silver exchange for more corn in rich countries than in poor countries? It is only in wealthy countries, where corn is expensive, that landowners urge legislators to ban the importation of corn. Who has ever heard of a law banning the import of raw products into America or Poland? - Nature effectively prohibited its import by the comparative ease of its production in these countries.

How then can it be true that "if you except corn and the other vegetables which are raised by human industry, all the other kinds of coarse products - cattle, poultry, game of all kinds, the useful fossils and minerals the land, etc., naturally becomes more expensive as society progresses. " Why should corn and vegetables alone be excluded? Dr. Smith's error throughout his work is to assume that the value of corn is constant; that even if the value of all other things can, the value of corn can never be increased. Corn, he says, still has the same value because it will always feed the same number of people. In the same way, you could say that this fabric always has the same value, because it will always have the same number of layers. What value can have to do with the power of food and clothing?

Corn, like any other product, has its natural price in every country, viz. this price which is necessary for its production, and without which it could not be cultivated: it is this price which governs its market price, and which determines the advisability of ex wear it abroad. If the import of corn was banned in England, its natural price could reach 6 l. per quarter in England, when it was only half that price in France. If, at that time, the import ban were lifted, the corn would fall on the English market, and not at a price between 6 l. and 3 l. , but finally and permanently at the natural price of France, the price at which it could be supplied to the English market, and allow the usual and ordinary profits of the shares in France; and it would remain at this price, whether England consumes a hundred thousand or a million quarters. If the demand from England was for the latter quantity, it is probable that because of the necessity for France to resort to land of lesser quality to supply this important supply, the natural price would increase in France; and that would of course also affect the price of corn in England. All I support is that it is the natural price of commodities in the exporting country, which ultimately regulates the prices at which they will be sold, if not monopolized, in the importing country.

But Dr. Smith, who so skillfully supported the doctrine of the natural price of products ultimately regulating their market price, assumed a case in which he believed that the market price would not be regulated nor by the natural price of export nor the importing country. "Decrease the real opulence of Holland or the territory of Genoa," he says, "while the number of their inhabitants remains the same; decrease their power to refuel from distant countries, and the price of corn, instead of sinking with this reduction in the quantity of their money which must necessarily accompany this declination, either as its cause or as its effect, will drive up the price of a famine. "

It seems to me that the opposite would happen: the decrease in purchasing power of the Dutch or Genoese could lower the price of corn for a time below its natural price in the country from which it was exported, as well than in the countries where it was imported, but it is quite impossible that it could ever carry it above this price. Only by increasing the opu lence from the Dutch or Genoese, that you could increase demand, and raise the price of corn above its old price; and this would only happen for a very limited time, unless new difficulties arise in obtaining supply.

Dr. Smith further notes on this subject: "When we run out of essentials, we have to part with all of the superfluity, the value of which, as it increases in times of opulence and prosperity, sinks in times of poverty and distress. " It is undoubtedly true; but it continues," it is otherwise with necessities. Their real price, the quantity of work they can buy or order, increases in times of poverty and distress, and sinks in times of opulence and prosperity, which are always periods of great abundance, because they do not could not be otherwise times of opulence and prosperity. Corn is a necessity, money is only a superfluity. "

Two propositions are put forward here, which have no link between them; one, that in the supposed circumstances, the corn would require more work, which is not disputed; the other, that the corn would be sold at a higher price, that it would exchange more money; I think this is wrong. It could be true, if corn was scarce at the same time, if the usual supply had not been provided. But in this case, it is abundant, it is not claimed that a quantity less than normal is imported, or that more is needed. To buy corn, the Dutch or the Genoese want money, and to get that money, they are forced to sell their superfoods. It is the market value and the price of these superfluities that are falling, and the money seems to increase relative to them. But this will not tend to increase demand for corn, or lower the value of money, the only two causes that can drive up the price of corn. Money, for want of credit and for other reasons, can be in high demand, and therefore expensive, compared to corn; but there is no fair principle that silver would be cheap and therefore the price of wheat would rise in such circumstances.

When we talk about the high or low value of gold, silver or any other commodity in diffIn some countries, we must always mention a means in which we value them, or no idea can be attached to the proposal. So, when we say that gold is more expensive in England than in Spain, if no goods are mentioned, what notion does the statement convey? If corn, olives, oil, wine and wool are cheaper in Spain than in England; estimated in these raw materials, gold is more expensive in Spain. If again, the material, the sugar, the cloth, etc. to be at a lower price in England than in Spain, then, estimated in these raw materials, gold is more expensive in England. Thus gold appears more expensive or less expensive in Spain, because the imagination of the observer can be fixed on the support by which it estimates its value. Adam Smith, having stamped corn and labor as a universal measure of value, would naturally estimate the comparative value of gold by the quantity of these two objects for which he would trade: and, therefore, when he speaks of the comparative value of gold in two countries, I understand it to mean its estimated value in corn and in work.

But we have seen that, estimated in corn, gold can have a very different value in twocountries. I have tried to show that it will be low in rich countries and high in poor countries; Adam Smith takes a different view: he believes that the value of gold estimated in corn is the highest in rich countries. But without examining further which of these opinions is correct, one or the other suffices to show that gold will not necessarily be lower in countries that own mines, although this is a proposition maintained by Adam Smith. Suppose England possesses the mines, and the opinion of Adam Smith, that gold is of the greatest value in rich countries, to be exact: although gold would flow naturally from England to all the other countries in exchange for their goods , it would not follow this gold was necessarily weaker in England, compared to corn and labor, than in these countries. In another place, however, Adam Smith speaks of the necessarily lower precious metals in Spain and Portugal, than in other parts of Europe, because these countries happen to be almost the sole owners of the mines that produce them. "Poland, where the feudal system continues to this day as a beggar coun try as before the discovery of America. The silver price of corn has increased, however ; the real value of precious metals has declined in Poland, in the same way as in other parts of Europe. Their quantity must therefore have increased there as elsewhere, and roughly in the same proportion as the annual product of land and labor . This increase in the quantity of these metals did not, however, seem to have increased this annual production, nor improved the factories and agriculture of the country, nor repaired the situation of its inhabitants. Spain and Portugal, countries that own the mines, are perhaps, after Poland, the two most begging countries in Europe. The value of precious metals, however, must be lower in Spain and Portugal than in any other part of Europe, loaded not only with freight and insurance, but at the cost of smuggling, their export being either prohibited or subject to a duty. Consequently, in proportion to the annual product of land and labor, their quantity must be higher in these countries than in any other part of Europe: these countries are, however, poorer than most of Europe. Although the feudal system was abolished in Spain and Portugal, it was not much better. "

Dr. Smith's argument seems to me to be as follows: - Gold, when estimated in corn, is cheaper in Spain than in other countries, and the proof is, not that corn is given by other countries to Spain for gold, but that the fabric, the sugar, the hardware are supplied by the countries in exchange for this metal.

Another disadvantage on which he insists is that, because of the advance of the tax, the profits on the advance must also be charged to the consumer, and that this addiThe national tax is that from which the Treasury derives no benefit.

In this last objection, I cannot subscribe to the opinion of M. Say. We will assume that the state wants to lift 1000 l immediately . and imposes it on a manufacturer who, for twelve months, will not be able to invoice the consumer for his finished goods. Because of this delay, he is obliged to invoice for his goods an additional price, not only of 1000 l. the amount of the tax, but probably 1100 l. , 100 l. being of interest on the 1000 l. Advanced. But in exchange for those additional 100 liters . paid by the consumer, it has a real advantage, in that its payment of the tax which the government immediately demanded, and which it must ultimately pay, has been postponed for one year; an opportunity was therefore offered to him to lend to the builder, who had the opportunity, the 1000 l. at 10 percent. or at any other interest rate that may be agreed. Eleven hundred pounds payable after one year, when the money is 10%. of interest, has no more value than 1000 l. to pay immediately. If the government delays receiving tax for a year until the manufacturing of the goods is completed, he might be obliged to issue an interest-bearing Treasury bill, and he would pay as much interest as the consumer would save in price, except, by indeed, from that part of the price that the manufacturer might be able, because of the tax, to add to his own actual earnings. If, for the sake of the Exchequer bill, the government would have paid 5 percent., A tax of 50 l. is registered by not delivering it. If the manufacturer has borrowed the additional capital at 5% and billed 10% to the consumer, he will also have earned 5%. on its advance beyond its usual profits, so that the manufacturer and the government earn together, or save, precisely the amount that the consumer pays.

Mr. Simonde, in his excellent work, De la Richesse Commerciale , following the same argument as Mr. Say, calculated that a tax of 4,000 francs, originally paid by a manufacturer, whose profits were at the moderate rate of 10 percent., Would, if the manufactured product passed only through the hands of five different people, be raised to the consumer the sum of 6,734 francs. This calculation is based on the assumption that whoever advanced the first tax would receive from the next manufacturer 4,400 francs, and he again from the next, 4,840 francs; so at each step 10%. on its value would be added to it. This assumes that the value of the tax would accrue at compound interest, not at the rate of 10 per cent. per year, but at an absolute rate of 10 percent., at each stage of its progress. This opinion of M. de Simonde would be correct if five years passed between the first advance of the tax and the sale of the goods taxed to the consumer; but if only one year passed, a remuneration of 400 francs instead of 2734 would give a profit of 10%. per year, to all those who contributed to the advance of the tax, whether the goods passed through the hands of five manufacturers or fifty.

Lower the cost of producing hats, and their price will eventually fall to their new natural price, although demand is expected to be doubled, tripled or quadrupled. Decrease the cost of subsistence for men, by decreasing the natural price of food and clothing, thanks to which life is maintained, and wages will eventually fall, although the demand for workers may very strongly increase.

The view that the price of commodities depends only on the proportion of supply to demand, or demand to supply, has become almost an axiom of political economy and has been at the origin many errors in this science. It is this opinion which has led Mr. Buchanan to maintain that wages are not influenced by an increase or a fall in the price of provisions, but only by the demand and supply of labor; and that a tax on labor wages would not increase wages because it would not change the proportion of workers' demand to supply.

It cannot be said that the demand for a product increases, if no additional quantity of it is bought or consumed; and yet, in such circumstances, its monetary value may increase. Thus, if the value of money were to fall, the price of each product would increase, because each of the competitors would be willing to spend more money than before on their pure hunt; but although its price has increased by 10 or 20 percent. if we did not buy more than before, it would not be, I believe, admissible to say that the variation in the price of the commodity was caused by the increase in demand. Its natural price, its cost of monetary production, would be really modified by the modified value of money; and without an increase in demand, the price of the product would naturally be adjusted to this new value.

"We have seen," says Mr. Say, "that the cost of production determines the lowest price at which things can fall: the price below which they cannot stay long, because production would then be completely stopped, be reduced Vol. II P. 26.

He then said that the demand for gold having increased in an even greater proportion than the supply, since the discovery of the mines, "its price in goods, instead of falling in the proportion of ten for one, fell only in the proportion of four to one; " that is, instead of falling proportionally its natural price had fallen, lowered in proportion to supply exceeding demand.48 " The value of each commodity always increases in a direct relationship to demand and in an inverse relationship to supply. "

The same opinion is expressed by the Earl of Lauderdale.

"With regard to variations in value, of which everything of value is susceptible, if we could for a moment suppose that a substance possessed an intrinsic and fixed value, so as to constantly make of it a quantity supposed, in all circumstances, of 'an equal value, then the degree of value of all things, determined by such a fixed norm, would vary according to the proportion between the quantity of them , and the demand for them, and each commodity would naturally be subject to a variation of its value, from four different circumstances.

2. "A decrease in its value, an increase in its quantity.

3. "It could suffer from an increase in its value, due to increased demand.

4. "Its value could be diminished by a failure in demand.

"As it will however become clear that no commodity can have a fixed and intrinsic value, so as to qualify it as a measure of the value of other goods, humanity is led to choose, as a practical measure of value the one that appears the least subject to one of these four sources of variation, the only causes of alteration in value .

"When, in common language, we therefore express the value of a commodity, it may vary from one period to what it is to another, as a result of eight different contingencies.

1. "Of the four circumstances set out above, in relation to the goods whose value we want to express.

2. "In the same four circumstances, in relation to the commodity we have adopted as a measure of value."49

This is true for monopolized products and, in fact, for the market price of all other products for a limited period. If the demand for hats were to double, the price would increase immediately, but this increase would only be temporary, unless the cost of production of the hats or their natural price were increased. If the natural price of bread fell by 50%. of a great discovery in the science of agriculture, the demand would not increase much, because no one would desire more than its needs would meet, and as demand would not increase, neither did supply; because a product is not supplied simply because it can be produced, but because there is a demand. So here we have a case where supply and demand have changed little or, if they have increased, they have increased in the same proportion; and yet the price of bread will have dropped by 50%. also at a time when the value of money had remained unchanged.

The products which are monopolized, either by an individual or by a company, vary according to the law that Lord Lauderdale has decreed: they decrease proportionally as the sellers increase their quantity, and increase in proportion to the eagerness of the buyers to buy their ; their price has no necessary link with their natural value: but the prices of the products, which are subject to competition and whose quantity can be increased to a moderate degree, will ultimately depend not on the state of demand and supply, but the increase or decrease in the cost of their production.

One ien the nature of the rent has in the old pages of this work been treated rather lengthily; yet I consider myself obliged to note some opinions on the subject, which appear to me to be erroneous, and which are the most important, as we find them in the writings of him to whom, of all men today, some branches of economics science is the most indebted. From Mr. Malthus' essay on the population, I am pleased with the opportunity to express my admiration. The assaults of opponents to this great work have only proven its strength; and I am confident that its just reputation will spread with the cultivation of this science which is the ornament so prominent. Mr. Malthus too - a explained the principles of rent satisfactorily, and showed that it increases or decreases in proportion to the relative advantages, either of fertility or of situation, of the various cultivated lands, and thus highlighted many difficult points related to annuity subject, which were previously either unknown or very imperfectly understood; yet I seem to have fallen into errors which his authority makes all the more necessary, while his characteristic candor makes him less disagreeable to notice. One of these errors is to assume that the annuity is a net gain and a new creation of wealth.

I do not share all of Mr. Buchanan's views on rent; but with those expressed in the following passage, quoted from his work by M. Malthus, I entirely agree; that is why I must oppose Mr. Malthus' comment on them.

"From this point of view, it (the rent) cannot constitute a general addition to the stock of the community, because the net surplus in question is nothing more than an income transferred from one class toanother; and from the mere circumstance of his changing hands, it is clear that no fund can come from which to pay taxes. The income that pays for the product of the land already exists in the hands of those who buy this product; and, if the subsistence price were lower, it would remain in their hands, where it would be just as available for taxation as when, by a higher price, it was transferred to the landowner. "

After various observations on the difference between raw and manufactured products, M. Malthus asked: "Is it then possible, with M. de Sismondi, to consider rent as the only product of labor, which has a purely nominal value , and the simple result of this increase in price that a seller obtains due to a particular privilege; or, with Mr. Buchanan, to consider it as no addition to the national wealth, but simply a transfer of value, advantageous only for owners, and proportionately detrimental to consumers? " 50

I have already expressed my opinion on this subject when dealing with rent, and I need only add that rent is a creation of value, if I understand this word correctly, but not a creation of wealth. If the price of corn, the difficulty of producing a part of it, had to go from 4 l. at 5 l. per quarter, one million quarters will be worth 5,000,000 l. instead of 4,000,000 l. and as this corn will be exchanged not only for more money but for more of all other merchandise, the possessors will have greater value; and as no one else will consequently have less, society as a whole will have greater value, and in this sense rent is a creation of value. But this value is so nominal that it adds nothing to wealth, that is to say, the necessities, conveniences and enjoyments of society. We should have exactly the same amount, not more goods, and the same million quarts of wheat as before; but the effect of its being evaluated at 5 l. per quarter, instead of 4 l. , would transfer part of the value of corn and basic commodities from their former owners to the owners. Rental is therefore a creation of value, but not a creation wealth; it adds nothing to the resources of a country, it does not allow it to maintain fleets and armies; because the country would have more available funds if its land were of better quality, and it could use the same capital without generating a rent.

In another part of Mr. Malthus' "investigation", he observed that "the immediate cause of the rent is obviously the excess of price above the cost of production at which the raw products are sold on the market", and in another place, he says, "that the causes of the high price of raw products can be of three kinds: -

"First and foremost, this quality of the land, by which it can be brought to provide a greater part of the necessities of life than that required for the maintenance of the people employed on the land.

"2dly. This quality proper to the necessities of life to be able to create one's own demand, or to raise a certain number of demanders in proportion to the quantity of necessary products produced.

"And 3dly. The relative scarcity of the most fertile land." Speaking of the high price of corn, Mr. Malthus obviously does not mean the price per quarter or per bushel, but rather the excess price for which the whole product will be sold, above the cost of its production, including always in the long term “cost of production”, profits as well as wages. One hundred and fifty quarters of corn at 3 l. 10 s. per quarter, would bring the landlord a rent greater than 100 quarters at 4 l. , provided that the production costs are identical in both cases.

The high price, if the expression is used in this sense, cannot then be qualified as a cause of rent; it cannot be said "that the immediate cause of the rent is obviously the excess of price above the cost of production, at which the raw products are sold on the market", because this excess is itself the rent. Rent, Mr. Malthus defined as "the part of the value of the whole product which remains with the owner of the land, after all expenses pertaining to his culture, of whatever nature, have been paid, including including profits from capital employed, estimated according to usual and ordinary rules profit rate of agricultural stocks at present. "Now, no matter how much this surplus can sell, it is the monetary rent; this is what Mr. Malthus means by" the excess price above the cost of production at which the raw products are sold in the markets; "and therefore in an investigation of the causes which can raise the price of raw products, compared to the cost of production, we look for the causes which can raise rents.

Referring to the primary cause of rising rents, Malthus makes the following comments: "We always want to know why consumption and supply are such that the price so far exceeds the cost of production, and the main cause is evidently the fertility of the land by producing the necessities of life decrease this abundance, decrease soil fertility and decrease the excess;. decrease it even more, and it will disappear. " Admittedly, excess of needed products will decrease and disappear, but that is not the issue. The question is whether the excess of their price above the cost of their production will decrease and disappear, because that is what the monetary rent depends on. Did Mr. Malthus justified in his inference that, because the excess quantity will decrease and disappear, "the cause of the high price of the necessities of life above the cost of production lies in their abundance, rather than in their scarcity; and is not only essentially different from the high price of artificial monopolies, but from the high price of these particular products of the land, not related to food, which can be called natural and necessary monopolies? "

Are there not circumstances in which the fertility of the earth and the abundance of its products can be reduced, without causing a reduced excess of its price above the cost of production, i.e. -to say a reduced pension? If there are, Mr. Malthus' proposal is far too universal; for it seems to me to state as a general principle, true in all circumstances, that the rent will increase with the increased fertility of the country, and will decrease with its diminished fertility.

Mr. Malthus would no doubt be correct if, to the extent that the land yielded abundantly,a greater part of the totality of the products was paid to the owner; but the opposite is the fact: when no other land, but the most fertile, is under cultivation, the owner has the smallest share of the entire production, as well as the smallest value, and it is only when lower lands are needed to feed a population increase, as the owner's share in the whole product and the value he receives gradually increase.

Suppose that the demand is for a million quarts of corn and that they are the product of the land currently cultivated. Suppose now that the fertility of all the land is so reduced that the same land will only produce 900,000 quarters. With demand for a million quarters, the price of corn would rise, and lower quality land would necessarily have to be used sooner than if the top land had continued to produce a million quarters. But it is this need to cultivate lower lands that is behind the rise in rents. Rent, it should be remembered, is not proportional to the absolute fertility of cultivated land, but proportional to relative fertility. Whatever cause may drive capital to lower lands, it must increase the rent; the cause of the rent being, as Mr. Malthus said in his third proposal, "the relative scarcity of the most fertile land". The price of corn will naturally increase with the difficulty of producing the last portions; but since the cost of production will not increase, because wages and profits taken together will always continue to be of the same value, 51 it is evident that the excess price above the cost of production, or, in other words, the rent, must increase with the decline in the fertility of the land, unless it is offset by a sharp reduction of capital, population and demand. It therefore does not appear that Mr. Malthus' proposal is correct: the rent does not increase and does not necessarily and necessarily decrease with the increase or decrease in the fertility of the land; but her increased fertility makes her able to pay increased rent at some point in the future. Land owned by very little fertility can never bear rent; lands with moderate fertility can be brought, as the population increases, to support a moderate rent; and land of great fertility high rent; but it is one thing to be able to bear high rent and another to pay it. The rent can be lower in a country where the land is extremely fertile than in a country where it yields a moderate yield, the latter being proportional rather to relative fertility than absolute - to the value of the product and not to its abundance. Mr. Malthus says that the "cause of the overpricing of the necessities of life above the cost of production is to be found in their abundance rather than their scarcity, and is essentially different from the high price of these particular products of land, not related to food, which can be called natural and necessary monopolies. "

How are they essentially different? Would not the abundance of these particular products of the land lead to an increase in rents, if their demand increased at the same time? and can the rent ever increase, whatever the commodity produced, in abundance simply and without increase in demand?

The second cause of rent mentioned by Mr. Malthus, namely "this quality specific to the necessities of life, to be able to create their own demand, or to raise a certain number of applicants in proportion to the quantity of necessary products produced", does not seem essential to me. It is not the abundance of necessities which arouses the demanders, but the abundance of the applicants which arouses the necessities.

We are not obliged to continuously produce a greater quantity of goods than that which is requested. If by accident a larger quantity were produced, it would fall below its natural price, and therefore would not pay the cost of production, as well as the usual and ordinary profits of the stock: thus the supply would be checked until 'it is in line with demand, and the market price has risen to the natural price.

Mr. Malthus seems to me too inclined to think that the population is only increased by the previous supply of food, "that it is food that creates its own demand", that it is first by supplying food thanmarriage is encouraged, instead of considering that the general progress of the population is affected by the increase in capital, the resulting demand for labor and the rise in wages; and that food production is only the effect of this demand.

It is by giving the worker more money, or any other commodity in which wages are paid, and which has not fallen in value, that his situation improves. Increasing population and increasing food will generally be the effect, but not the necessary effect of high wages. The modified condition of the worker, because of the increased value paid to him, does not necessarily oblige him to marry and take care of a family - he can, if he pleases, exchange his salary increases for goods that can contribute to his pleasures - for chairs, tables and equipment; or for better clothes, sugar and tobacco. His wage increase will then be followed with no other effect than an increase in demand for some of these products; and since the race of workers will not be appreciably increased, their wages will remain permanent ly high. But although this may be the consequence of high wages, yet so great are the pleasures of domestic society, that in practice it is invariably observed that an increase in the population follows the modified condition of the worker; and it is only because it does, that a new and increased demand for food arises. This demand is then the effect of an increase in population, but not the cause - it is only because the expenditure of the people takes this direction, that the market price of basic products exceeds the natural price, and that the amount of food needed is produced; and it is because the number of people increases, that wages fall again.

What reason can a farmer have for producing more maize than what is really demanded, when the consequence would be a fall in his market price below his natural price, and consequently a deprivation for him of part of his profits, reducing them below the general rate? "If," says Mr. Malthus, "the necessities of life, the most important products of the earth, did not have the property of creating an increase in demand proportionate to their increased quantity, such an increase in the quan would cause a drop in their exchangeable value.52 As abundant as the production of a country is, its population can remain stationary. And this abundance without proportionate demand, and with a very high corn labor price, which would naturally take place in these circumstances, could reduce the price of raw products, like the price of manufactured products, to the cost of production. "

"Could reduce the price of raw products to the cost of production?" Is it ever for a duration greater or less than this price? Does not Mr. Malthus himself declare that it will never be so? "I hope," he said, "to be excused for having lived a little and for having presented to the reader in various forms the doctrine that corn, in reference to the quantity actually produced , is sold at its necessary price as of manufactured goods, because I regard it as a most important truth, which has been overlooked by economists, by Adam Smith and all of these writers who portrayed raw materials as still selling at a monopoly price. "

"Any extended country can therefore be regarded as possessing a gradation of machinery for the production of maize and raw materials, including not only all the various qualities of the poor lands, of which each territory generally has an abundance, but the inferior machinery which can be said to be used when good land is being forced more and more for additional products. As the price of raw products continues to rise, these inferior machines are successively put into action; and the price of raw products continues to fall The illustration here used serves to show both the need for the actual price of corn for the actual product , and the different effect that would cause a great reduction in the price of a particular manufacture, and a great reduction in the price of raw products. " 53

How to reconcile these passages with the one who asserts that if the necessities of life did not have the property of creating an increase in demand proportional to their increased quantity, the abundant quantity produced would then, and only then, reduce the price of the crude produced at production cost? If corn is never lower than its natural price, it is never more abundant than the real population demands for its own consumption; no store can be opened consumption of others; it can never, by its cheapness and its abundance, be a stimulant for the population. Since corn can be produced at low prices, raising workers' wages will have more power to support families. In America, the population is growing rapidly, because food can be produced at a cheap price, not because an abundant supply has already been provided. In Europe, the population is growing relatively slowly, because food cannot be produced at a cheap price. In the normal and ordinary course of things, the demand for all products precedes their supply. In saying that corn, like manufactured products, would fall to its producer price, if it could not increase the demand, Mr. Malthus cannot mean that all the rent would be absorbed; for he himself rightly remarked that if all the rents were abandoned by the owners, the wheat would not fall; rent being the effect, not the cause of the high price, and there is always a quality of cultivated land that pays no rent, whose wheat replaces with its price, only wages and profits.

In the next passage, Mr. Malthus saidgiven a capable account of the causes of the rise in the price of raw products in rich and progressive countries, in every word with which I agree; but it seems to me to be in contradiction with some of the propositions which he maintained in certain parts of his Essay on rent. "I do not hesitate to assert that, apart from irregularities in a country's currency and other temporary and accidental circumstances, the cause of the high comparative monetary price of maize is its high comparative real price , or the greater quantity of the capital and labor that must be used to produce it, and that the reasons why the real price of corn is higher and continues to rise in countries that are already rich and continue to grow in prosperity and population , find themselves in the necessity of constantly resorting to poorer land, to machines which require a higher expenditure to work them, and which consequently cause each additional cost to the raw products of the country to be bought at a higher cost; , it is found in the important truth, that corn in a progressive country, is sold at the price necessary to give the actual supply; and as this offer becomes more and more difficult, the price increases proportionally. "

The real price of a commodity is here correctly indicated as dependent on the greater or lesser amount of labor and capital (i.e. accumulated labor) which must be used to produce it. The real price does not depend, as some have argued, on monetary value; nor, as others have said, on the value relating to corn, labor or any other product taken separately, or all the products collectively; but, as M. Malthus rightly says, "on the greatest (or least) amount of capital and labor which must be employed to produce it".

Among the causes of the rise in rents, mentions Mr. Malthus, "such an increase in the population which will lower the wages of labor". But if, as labor wages fall, the profits of the stocks increase, and they are together always of the same value, 54 No drop in salary can increase the rent, because it will not decrease either the share or the value of the share of the pro which will be allocated to the farmer and the worker together, and will therefore not leave a larger part, nor a greater value for the owner. To the extent that less is allocated to wages, more will be allocated to profits, and vice versa . This division will be settled by the farmer and his workers, without any interference from the owner; and indeed it is a question in which he can have no interest, other than one division may be more favorable than another, to new accumulations and a new demand for land. If wages go down, profits, not rents, will go up. If wages went up, profits, not rents, would fall. The rise in rents and wages and the fall in profits are generally the inevitable effects of the same cause: the increase in demand for food, the increase in the amount of labor required to produce it and its consequently high price. If the landlord gave up all of his rent, the workers would not be the least in the world to benefit. If the workers were to give up all their wages, the owners would derive no advantage from such a circumstance; but in either case, the farmer would receive and keep whatever he gave up. It's my effort to show in this work that a drop in wages would only have an effect on increasing profits.

Another cause of rising rents, according to Malthus, is "agricultural improvements or increased efforts that will decrease the number of workers needed to produce a given effect". This would not increase the value of the entire product and therefore would not increase the rent. It would rather have a contrary tendency, it would lower the rent; for if, as a result of these improvements, the actual amount of food needed could be supplied either with fewer hands or with less land, the price of raw products would fall and capital would be withdrawn from the land. 55 Nothing can increase the rent, but a demand for new, lower-quality land, or a cause that will alter the relative fertility of land already cultivated. 567 improvements in agriculture and in the division of labor, are common to all lands; they increase the absolute quantity of raw products obtained from each, but probably do not much disturb the relative proportions which previously existed between them.

Mr. Malthus rightly commented on an error by Adam Smith and said: "The substance of his argument (of Dr. Smith) is that corn is of such a special nature that its real price cannot be increased by an increase of its the price of silver, and that, as it is clearly an increase in the real price alone, which can encourage its production, the rise in the price of silver, occasioned by a premium, cannot have such a effect. "

He continues: "It is in no way intended to deny the powerful influence of the price of corn on the price of labor, on average over a considerable number of years; but that this influence is not of a nature to prevent the movement of capital to or from the earth, which is the precise point in question, will be sufficiently highlighted by a brief inquiry into the way in which work is paid for and placed on the market, and by an examination of the consequences to which the supposition of Adam Smith's proposal would inevitably lead. "57

Mr. Malthus then states that demand and the high price will encourage the production of raw products as effectively as the demand and high price of any other product will encourage its production. From this point of view, it will be seen from what I have said about the effects of premiums that I fully agree. I noticed the passage "Observations on the Corn Laws" by Mr. Malthus in order to show how different the term real price is used here, and in his other brochure, entitled "Reasons for an opinion, etc.". In this passage, Mr. Malthus tells us that "it is clearly an increase in the real price alone that can encourage the production of corn", and by real price, he obviously means the increase in its value compared to all others things, or in other words, the rise of its market above its natural price, or the cost of its production. If, by real price, this is what is meant, Mr. Malthus' opinion is undoubtedly correct; it is the increase in the market price of corn which alone encourages its production, because it can be posed as a uniformly true principle, that the only encouragement to increase the production of a commodity is its market value greater than its value natural or necessary.

But this is not the meaning that Mr. Malthus, on other occasions, attaches to the term real price. In the rent essay, Mr. Malthus said, "the real increasing price of corn, I mean the real amount of labor and capital, which was used to produce the latest additions to the national product " In another part, he states that "the cause of the high comparative real price of corn is the greater amount of capital and labor that must be used to produce it". 58 Suppose that in the foreground by the way we had to substitute this definition of real price, wouldn't it work like this? - "It is clearly the increase in the amount of labor and capital that must be used to produce corn, which alone can promote its production." This would be to say that it is clearly the increase in the natural or necessary price of corn which encourages its production, a proposition which could not be maintained. It is not the price at which corn can be produced that influences the quantity produced, but the price at which it can be sold. It is in proportion to the excess of its price above the cost of production that capital is attracted or repelled from the earth. If this excess is of a nature to give to the capital thus employed, greater than the general profit of the stock, the capital will go to the land; if it is lower, it will be removed.

Nothing can be more just than Mr. Malthus' following comments on Adam Smith's standard of value. "Adam Smith was obviously led into this train of arguments, starting from his habit of considering work as the standard measure of value , and corn as the measure of work. But this corn is a very inaccurate measure of work , the history of our own country will demonstrate amply, where the workforce , compared to corn, will be found to have experienced the greatest and striking variations, not only from year to year , but from a century at, and for ten, twenty and thirty years together. and that neither labor nor any other commodity can be a precise measure of real value in exchange , is now considered one of the most essential doctrines of political economy; and, indeed, follows from the very definition of exchange value. "

If neither corn nor labor are precise measures of real value in exchange, which they clearly are not, what is the commodity? - certainly none. If then the expression real price of goods has a meaning, it must be that which M. Malthus stated in the Essay on rent - it must be measured by the proportional quantity of capital and labor necessary to produce them.

In Mr. Malthus' "Survey on the Nature of Rent," he says, "apart from irregularities in a country's currency and other temporary and accidental circumstances, the cause of the high comparative monetary price of corn is its real price compared, or the greatest amount of capital and labor that must be used to produce it . 59

It is, I believe, the correct record of all permanent price variations, whether corn or any other commodity. A commodity can only increase permanently, either because more capital and labor must be used to produce it, or because money has lost value; and on the contrary, it can only fall in price, either because less capital and labor can be used to produce it, or because money has increased in value.

A variation resulting from the last of one or other of these alternatives, an altered value of money, is common to all products; but a variation resulting from the first cause is limited to the particular commodity requiring more or less labor in its production. By authorizing the free importation of maize or by improving agriculture, raw products would fall; but the price of no other merchandise would be affected, except in proportion to the fall in the real value, or the cost of production, of the raw products which were part of its composition.

Mr. Malthus, having recognizedThe principle cannot, I think, systematically maintain that the total monetary value of all the products of the country must fall exactly in proportion to the fall in the price of corn. If the corn consumed in the country was worth ten million a year and the manufactured and foreign products consumed were worth twenty million, or a total of thirty million, it would not be permissible to infer that the annual expenses were reduced. to 15 million, because corn had dropped 50 percent, or from 10 to 5 million.

The value of the raw products used in the composition of these manufactured products should not, for example, exceed 20 per cent. of their total value, and therefore the drop in the value of manufactured goods, instead of being 20 to 10 million, would only be 20 to 18 million; and after the 50 per cent fall in the price of maize, the total amount of annual expenditure, instead of falling from 30 to 25 million, would drop from 30 to 23 million. 60

Instead of thus considering the effect of a fall in the value of gross products; as Mr. Malthus was required to do by his previous admission; he considers it exactly the same with a 100% increase. in value for money, and, therefore, argues as if all commodities would fall to half their former price.

"In the twenty years beginning with 1794," he says, "and ending in 1813, the average price of British corn per quarter was about eighty-three shillings; in the ten years ending with 1813, ninety-two shillings, and during the last five years of the twenty, one hundred, and eight shillings, during which time the government had borrowed nearly five hundred million real capital, for which, on average approximate, excluding the sinking fund, he agreed to pay about five percent. But if the corn were to fall to fifty shillings per quarter, and other products in proportion, instead of interest of about five percent., the government would actually pay interest of seven, eight, nine, and, for the last two hundred million , ten percent .

"To this extraordinary generosity towards the shareholders, I would be ready to make no objection, if it were not necessary to consider by whom it must be paid; and a moment of reflection will show us, that it cannot be paid only by the working classes of society, and the owners, that is to say by all those whose nominal income will vary according to variations in the measurement of value. The nominal incomes of this part of society, by compared to the average of the past five years, will be halved, and on this nominally reduced income, they will have to pay the same nominal amount of tax. "61

First, I think, I have already shown, that the nominal income of the whole the country will not be diminished in the proportion for which Mr. Malthus claims here; it would not follow that, because the corn fell by fifty percent., the income of each man would be reduced by fifty percent. value. 62

Secondly, I think the reader will agree with me, that the increased burden, if admitted, would not fall exclusively "on the owners and the working classes of society:" the shareholder, by his expenses , contributes its share to the support of public charges in the same way as the other classes of society. If then the money became really more precious, although it would receive a greater value, it would also pay a greater value in taxes, and, therefore, it cannot be true that the totality of the addition to the real value of interest would be paid by "the owners and the working classes."

Mr. Malthus' entire argument, however, is built on a crippled basis: it assumes,because the gross income of the country is decreased, that, therefore, the net income must also be decreased, in the same proportion. One of the objects of this work was to show that, with each fall in the real value of necessities, the wages of labor would fall and that the profits of the actions would increase, i.e. those of any given annual value a smaller portion would go to the working class and a larger portion to those whose funds would employ this class. Suppose that the value of the goods produced in a particular production is 1000 l. , and to distribute between the master and his workers, at a rate of 800 l. to workers, and 200 l. to the master; if the value of these products were to fall to 900 l. and 100 l. to be saved from the wages of labor, because of the fall in necessities, the net income of the masters would in no case be altered, and, consequently, he could with as much ease pay the same amount of taxes, after, as before the price reduction. 63

The difference between the value of corn and all other products sold in the country, before and after the importation of cheap corn, would only be equal to the fall in rent; for, regardless of rent, the same amount of labor would always produce the same value.

The whole reduction which is made on wages is a value actually added to the value of the net income previously held by the company; while the only value derived from this net income is the value of the part of their rent which the owners will be deprived of by a fall in gross income. when we to consider that the fall of the products acts on a limited number of owners, while reducing the wages not only of those employed in agriculture, but of all those employed in the manufactures and the trade, one can doubt that the revenues of the company would suffer any reduction whatsoever.64

But, if not, it should not be assumed that the ability to pay taxes will decrease to the same extent as the monetary value, even of net income. Suppose my net income went from 1000 l. at 900 l. ; but that my taxes were always the same, at 100 l. : is not it likely that my ability to pay these 100 l. can be bigger with the smaller ones than with the bigger incomes? Commodities cannot fall as universally as Mr. Malthus assumes, without benefiting consumers greatly, without allowing them much smaller cash incomes to order more of the conveniences, necessities and luxuries of human life; and the question is resolved in this - if those in possession of the country's net income will benefit as much from the fall in commodity prices as they will suffer from the greatest real taxation. On which side the balance can predominate, will depend on the proportion that the taxes carry to the annual income; if it is extremely large, it can undoubtedly more than offset the advantages of cheap necessities; but I hope enough that it has been said, to show, that Mr. Malthus very much overestimated the loss for the taxpayers, of a fall in one of the most important necessities of life; and that if they were not entirely remunerated for the real increase in taxes, by the fall in wages and the increase in profits, they would be more than compensated, by the cheaper price of all the objects on which their income were spent.

There is no doubt that the shareholder benefits from a large drop in the value of corn; but if no one else is hurt, that's not a reason why corn should be made expensive: because the shareholder's gains are national gains and, like all other gains, increase the country's real wealth and power. If they benefit unduly, let it be determined precisely to what extent they are, and then it is up to the legislator to find a remedy; but no policy can be more reckless than excluding us from the great benefits of cheap corn and abundant production, simply because the shareholder would have an undue share of the increase.

Paying dividends on stocks by the monetary value of corn has never been attempted. If justice and good faith demanded such regulation, a large debt is owed to the former shareholders; because they have received the same cash dividends for over a century, although the price of corn may have doubled or tripled. 65

Since rent is the effect of the high price of corn, the loss of rent is the effect of a low price. Foreign corn never competes with corn of origin which offers rent; the fall in price invariably affects the landlord until all of his rent is absorbed; - if it falls even further, the price will not even allow the common benefits of the stock; capital will then leave the land for another use, and the wheat, which was previously cultivated there, will then, and until then, be imported. From the loss of rent, there will be a loss of value, of estimated monetary value, but there will be a gain in wealth. The quantity of raw products and other productions together will be increased, from the greater ease with which they are produced; they will, although increased in quantity, diminished in value.

Two men employ equal capital - one in agriculture, the other in manufacturing. That of agriculture produces an annual net value of 1200 l. of which 1000 l. is kept for profit and 200 l. is paid for rent; the other in manufacturing only produces an annual value of 1000 l. Suppose that at import, the same quantity of corn can be obtained for products that cost 950 l. , and that, consequently, the capital employed in agriculture is diverted towards manufactured products, where it can produce a value of 1000 l. the country's net income will be of lower value, it will be reduced by 2200 l. at 2000 l. , but there will be not only the same quantity of products and corn for its own consumption, but also as much addition to this quantity as 50 l. would buy, the difference between the value at which its manufactured products were sold to the foreign country and the value of the corn which had been bought to him.

Mr. Malthus says: "It has been rightly observed by Adam Smith, that no equal amount of productive labor employed in manufactured goods can ever cause reproduction as great as in agriculture." If Adam Smith speaks of value, he is right, but if he speaks of wealth, which is the important point, he is mistaken, because he himself defined wealth as including the necessities, the conveniences and the pleasures of human life. One set of necessities and amenities admits of no comparison with another set; the value in use cannot be measured by any known standard, it is estimated differently by different people.

[6] Did Mr. Say not forget, in the following passage, that it is the cost of production that ultimately regulates the price? "The product of labor employed on the land has this particular property, that it does not become more expensive by becoming rarer, because the population always decreases at the same time as food decreases, and consequently the quantity of these products demanded. , decreases at the same time as the quantity supplied. In addition, it is not observed that corn is more expensive in places where there is a lot of wasteland than in fully cultivated countries. France were much more imperfectly cultivated in the Middle Ages than they are now; they produced much less raw products: nevertheless, from all that one can judge in relation to the value of other things, maize n 'was not sold at a higher price. If the product was less, the population too; the weak demand compensated for the weak supply. " vol. ii. 338. Mr. Say being impressed by the view that the price of commodities is regulated by the price of labor, and rightly assuming that charitable institutions of all kinds tend to increase the population beyond what 'It would be otherwise, and therefore to lower wages, says: "I suspect that the cheap goods, which come from England is partly caused by the many charitable institutions which exist in this country." flight. ii. 277. This is a consistent opinion among those who maintain that wages regulate prices.

[7] "In agriculture too," says Adam Smith, "nature works with man; and although his labor costs nothing, his production has its value, as well as that of the most expensive worker" . Nature's work is paid for, not because it does a lot, but because it does little. As she becomes careless in her gifts, she demands a higher price for her work. Where it is beneficial, it always works for free. "The working cattle used in agriculture not only cause, like the workers of the manufactures, the reproduction of a value equal to their own consumption, or to the capital which employs them, with the profits of its owner, but of a value Beyond the capital of the farmer and all his profits, they regularly cause the reproduction of the rent of the owner. This rent can be considered as the product of these powers of nature, which the owner lends to the farmer. It is more or less large according to the supposed extent of these powers, that is to say according to the supposed natural or improved fertility of the land. It is the work of nature which remains, after deduction or compensation for all that can be considered as human labor. It is rarely less than a quarter and often more than a third of total production. No equal amount of productive labor employed in factories can never give rise to such a great reproduction. Nature does nothing, man does everything ; and reproduction must always be proportionate to the strength of the agents which cause it. The capital employed in agriculture, therefore, not only sets in motion a greater quantity of productive labor than any equal capital employed in the factories, but also in proportion to the quantity of productive labor which it employs, it adds much value greater to the annual production of land and labor in the country, to the wealth and real income of its inhabitants. Of all the ways in which capital can be used, it is by far the most beneficial to society. "- Book II. Chap. Vp 15.