The Increase of National Wealth

The increase of population, and of national wealth, contributes to extend the market, in a manner still more advantageous.

Yet every conceivable increase of population and of wealth, does not, of necessity, extend the market; it is only such an increase as attends the increased comforts of the most numerous class. When cultivation on the great scale has succeeded cultivation on the small, more capital is perhaps absorbed by land, and re-produced by it; more wealth than formerly may be diffused among the whole mass of agriculturists, but the consumption of one rich farmer’s family, united to that of 50 families of miserable hinds, is not so valuable for the nation, as that of 50 families of peasants, no one of which was rich, but none deprived of an honest competence.

So also in towns, the consumption of a manufacturer worth a million, under whose orders are employed a thousand workmen, reduced to the bare necessaries of life, is not so advantageous for the nation, as that of a hundred manufacturers far less rich, who employ each but ten workmen far less poor.

10,000 pounds of income, whether they belong to a one man, or to 100, are all equally destined for consumption.

But this consumption is not of the same nature.

A man, however rich, cannot employ for his use an infinitely greater number of articles than a poor man, but he employs articles infinitely better; he requires work far better finished, materials far more precious, and brought from a far greater distance.

It is he who especially encourages the perfection of certain workmen, that finish a small number of objects with extreme skill; it is he who pays them an exorbitant wage.

It is he also that especially rewards such workmen as we have named unproductive, because they procure for him nothing but fugitive enjoyments, which can never by accumulation form part of the national wealth; and whilst the effect of increasing capital is generally to concentrate labour in very large manufactories, the effect of great opulence is almost entirely to exclude the produce of those large manufactories from the consumption of the opulent man.

The diffusion of wealth, therefore, still more than its accumulation, truly constitutes national prosperity, because it keeps up the kind of consumption most favourable for national re-production.

The manufacturer’s market may, in the last place, be extended, by what forms the noblest wish of a statesman, the progress of civilization, comfort, security, and happiness, among barbarous nations.

Europe has arrived at such a point, that, in all its parts, there is to be found an industry, a quantity of fabrication, superior to its wants; but if false policy did not incessantly induce us to arrest the progress of civilization among our neighbours.

If Egypt had been left in the hands of a people requiring the arts of Europe; if Turkey were extricated from the oppression under which it groans; if our victories over the inhabitants of Barbary had been profitably employed in giving back the coasts of Africa to social life;

If Spain had not again been yielded to a despotism which destroys and ruins her population; if the independents of America were protected, so that they might be allowed to enjoy the advantages which nature offers them; if the Hindoos, subject to Europe, were amalgamated with Europeans; if Franks were encouraged to settle among them, in place of being repelled, - consumption would increase in these different counties, rapidly enough to employ all this super-abundant labour, which Europe at present knows not how to dispose of, and to terminate this distress in which the poor are plunged.

The more superior the buyer’s price is to the seller’s, the more profit does trade give to be shared among the trader, and all those whom he employs in the transport and distribution of his goods; the manufacturer, and all those whom he employs in the production of them.

Hence one of the great and constant objects of governments has been, to increase this difference, that their manufacturers might be enabled to produce cheap, and so find many buyers, and to sell dear to such as could not buy elsewhere, and so gain a large profit. The progress of society generally enables nations to produce cheaper; the almost ever injudicious protection of government often gives them means of selling dearer.

The low price of workmanship is the first cause of manufacturing profit; but this low price is never a national advantage, except when it is produced by superiority of climate, greater fertility of soil, or abundance of provision. On the contrary, when it arises from the difficulty of communication, which prevents cultivators from reaping all the profit of their wares, it can only be regarded as a private advantage, acquired at the expense of the national advantage. When the low price of workmanship arises from the poverty of day-labourers, forced by competition to content themselves with what is necessary for life; though commerce may profit by the circumstance, it is nothing better than a national calamity.

Abundance of capital, and the consequence of this, a low price of interest, likewise doubly contribute to diminish the price of production. With more capital, the manufacturer and merchant transact their purchases and sales at a more favourable moment; they are not pressed by either operation, or compelled to provide for the print by a sacrifice of future advantage. Executing all kinds of labour more on the great scale, they save time, and all those incidental charges, which are the same for a great and for a small sum. But as to the saving made by the merchant on the interest of money, it is made at the expense of a particular class, deriving their revenue from trade; it does not enrich the nation any more than the diminution of wages enriched it; it only gives to one what it takes from another.

The increasing division of labour forms, as we have seen, the chief cause of increase in its productive powers; each makes better what he is constantly engaged in making, and when, at length, his whole labour is reduced to the simplest operation, he comes to perform it with such ease and rapidity, that the eye cannot make us comprehend how the address of man should arrive at such precision and promptitude. Often also this division leads to the discovery, that as the workman is now worth nothing more than a machine, a machine may in fact supply his place. Several important inventions in mechanics applied to the arts, have thus sprung from the division of labour; but, by the influence of this division, man has lost in intelligence all that he has gained in the power of producing wealth.

It is by the variety of its operations that our soul is unfolded.

It is to procure citizens that a nation wishes to have men, not to procure machines At for operations a little more complicated than those performed by fire or water. The division of labour has conferred a value on operations so simple, that children, from the tenderest age, are capable of executing them; and children, before having developed any of their faculties, before having experienced any enjoyment of life, are accordingly condemned to put a wheel in motion, to turn a spindle, to empty a bobbin. More lace, more pins, more threads, and cloth of cotton or silk, are the fruit of this great division of labour; but how dearly have we purchased them, if it is by this moral sacrifice of so many millions of human beings!

The employment of machinery in place of men, has contributed generally to lessen the price of production. At the renovation of arts and civilization, there was so much work to be done, and so few hands to do it; oppression had so far reduced the poor class; there remained so much uncultivated land in the country; so many ill-supplied trades in towns;

Sovereigns required so many soldiers for war, that it seemed workmanship could never be economized enough, since an artisan, sent away from one trade, would always find ten others ready to receive him. Circumstances are not now the same; our labour is scarcely sufficient for the labourers. We shall endeavour, in another place, to explain the cause of this fact; in the mean time, surely none will maintain that it can be advantageous to substitute a machine for a man, if this man cannot find work elsewhere; or that it is not better to have the population composed of citizens than of steam-engines, even though the cotton cloth of the first should be a little dearer than that of the second.

The application of science to art is not limited to the invention of machinery; its result is the discovery of raw materials, dyeing ingredients, preservative methods more sure and economical. It has produced better work at a cheaper rate; it has protected the health of labourers, as well as their produce; and its effect in augmenting wealth has almost always been beneficial to humanity.

Finally, the different quarters of the globe possess advantages of climate, soil, exposure, which not only render the subsistence of man more easy or cheaper, but also place within his reach certain raw materials, which other nations cannot procure at the same price.

Hence results in their favour a kind of monopoly, which they exercise over others, and of which it is rare that they do not take advantage. There is also, in some degree, a natural advantage in the superiority of the people itself, in certain climates.

The bounty of nature seems to have reserved for those who inhabit them a superiority of industry, intelligence, strength of body, or constancy in labour, which do not even require to be developed by education.

But other qualities, other virtues, which appear to contribute more effectually still to the increase of riches, as well as to the happiness of society - the love of order, economy, sobriety, justice - are almost always the work of public institutions. Religion, education, government, and principles of honour, change the nature of men; and as they make good or bad citizens of them, they advance or retard their approach to the object proposed by political economy.

But governments have rarely been satisfied with such advantages as the trade of their states might owe to nature, or to the progress of society. They have attempted to favour the increase of commercial wealth; and their different expedients have most frequently tended to assist the merchant in selling dear, rather than producing cheap.

With the latter object, however, we have seen the exportation of raw materials prohibited, the rate of interest fixed, and laws enacted to lower the wages of labour.

These three expedients had a common fault, that of sacrificing one class to another, and founding the profit of trade, not on the advantage of consumers, but on the loss of cultivators, capitalists, or workmen; so that its profits, far from being an increase of the national wealth, were a displacement of it.

The raw materials on which the arts operate, are all, or nearly all, produced by agriculture or at least drawn from the ground; hence they form part of the proprietor’s or the cultivator’s wealth. If some advantage did not arise from exporting them, nobody would think of forbidding them to be exported. This prohibition indicates sufficiently, that the persons who produced them were better paid, or gained more by selling them to strangers; and the law restricts their market, in opposition to the principle which we have pointed out above, as the foundation of commercial interest; the principle of obtaining for each article of produce the highest possible price.

From such prohibitions to export, there must result, first, a diminution in the price of the raw material, for its price is no longer kept up by free trade; secondly, a diminution in the quantity produced, because it is regulated by the interior demand; and lastly, a deterioration of its quality, for a calling which is ill rewarded, is likewise ill attended to.

This, therefore, is one of the most injudicious means of favouring trade; and at the same time, it sacrifices the income of all those who contribute to produce the raw material. Whatever trade gains from them, cannot be considered as adding aught to the national revenue.

To fix the interest of money, or to suppress it altogether, as some legislators have attempted, has, generally been the consequence of religious prejudices, and of mad attempts to adapt the Jewish legislation to modern Europe.

The effect of these laws, so opposite to the general interest, has always been either to force contractors to envelop themselves in a secrecy which they must require payment for, and may use as a snare for the unsuspiciousness of others; or else to force capitalists to employ, in other counties, that capital which they could not lend in their own neighborhood, with the same safety and advantage.

But the very end which legislators proposed was bad; a diminution in the rent of the national capital, is a national evil; it is a loss of part of the revenue. Most frequently, indeed, this evil is the sign of an advantage greatly superior to it, namely, the increase of capitals themselves; but, in forcibly producing the sign, we cannot at all forcibly produce the thing, any more than by turning round the pointers of a watch we can alter the flight of time.

Attempts on the part of government to fix the rate of wages, to make workmen labour at a lower price, are ever the most impolitic and the most unjust of these partial laws.

If government should propose, as an object, the advantage of any one class in the nation at the expense of the rest, this class ought to be precisely the class of day-labourers. They are more numerous than any other; and to secure their happiness is to make the greatest portion of the nation happy. They have fewer enjoyments than any other; they obtain less advantage than any other from the constitution of society; they produce wealth, and themselves obtain scarcely any share of it. Obliged to struggle for subsistence with their employers, they are not a match for them in strength.

Masters and workmen are indeed mutually necessary to each other; but the necessity weighs daily on the workman; it allows respite to his master. The first must work that he may live, the second may wait and live for a time without employing workmen. Hence in the riots and combinations of workmen for obtaining an increase of wages, their conduct is often violent and tumultuous, and often merits the chastisement which it never fails to receive; but scarcely an instance exists, where justice has not been upon their side.

The expedients invented by governments to assist their merchants in selling dear, are numerous. Some tend to diminish the number of producers in a market of given extent, and therefore to force buyers to raise their price; such are apprenticeships, corporations, monopolies granted to companies, prohibitions to import, exclusive governments of colonies, and favours obtained by treaties of commerce; others, such as bounties and drawbacks, are destined really to extend the market; though, by securing to the manufacturer a profit at the government’s expense, not the consumer’s.

The regulations of apprenticeships and the statutes of corporations, were destined, it is said, to hinder ignorant workmen from following any trade which they did not yet understand; they were forced to devote a determinate number of years to learn it, and afterwards to gain admission into a body which always made obstacles to the entrance of new comers, and limited their number. The pretence of thus watching over the training of artisans cannot be made good. It has often been proved, that rivalship alone gives that training, whilst a long apprenticeship blunts the mind and discourages industry; but the true, though secret object, to diminish the number of those exercising a trade, was attained.

The corporate body exercised a kind of monopoly against the consumer; it took care at all times to keep the supply below the demand. The merchant doubtless gained more; but he gained on a smaller production. There was less work done, less increase of capital, less population supported; and as to the merchant’s extraordinary profit, it was compensated by an equal loss to the consumer, who was obliged to pay, not according to his own advantage or convenience, but according to the arbitrary caprice of a corporation which gave laws to him.

In all trading counties, a more or less exclusive monopoly has been granted, on certain occasions, to some associations of merchants, under the name of Trading Companies. The avowed motive for sacrificing the whole class to this privileged number was the particular nature of the trade thus subjected to a monopoly, which trade it was said could not be supported except by very extensive funds; but governments had often a secret motive besides;

This was, the sum of money for which the merchants bought their privilege. A company’s monopoly has never failed to heighten the price for the consumer, to diminish production and consumption, to give the national capital a false direction; sometimes by attracting it prematurely to a branch of trade which was not yet suitable, sometimes by repelling it when fruitlessly seeking an employment.

But although companies obtained the desired privilege of buying cheap and selling dear, by nature they are so ill suited for economy and trading speculations, that although amazingly rich, and sometimes sovereigns of counties, these companies, their administrators having no immediate interest in the prosperity of their trust, have almost all been robbed, and very few of them have not ended in bankruptcy.