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The appearance of a treatise like the present, on a subject on which so many works of merit already exist, may be thought to require some explanation.

It might perhaps be sufficient to say, that no existing treatise on Political Economy contains the latest improvements which have been made in the theory of the subject. Many new ideas, and new applications of ideas, have been elicited by the dis- cussions of the last few years, especially those on Currency, on Foreign Trade, and on the important topics connected more or less intimately with Colo- nization: and there seems reason that the field of Political Economy should be re-surveyed in its whole extent, if only for the purpose of incorporating the results of these speculations, and bringing them into harmony with the principles previously laid down by the best thinkers on the subject.


To supply, however, these deficiencies in former treatises bearing a similar title, is not the sole, or even the principal object which the Author has in view. The design of the book is different from that of any treatise on Political Economy which has been produced in England since the work of Adam Smith.

The most characteristic quality of that work, and the one in which it most differs from some others which have equalled or even surpassed it as mere expositions of the general principles of the subject, is that it invariably associates the principles with their applications. This of itself implies a much wider range of ideas and of topics, than are included in political economy, considered as a branch of abstract speculation. For practical purposes, political econ- omy is inseparably intertwined with many other branches of social philosophy. Except on matters of mere detail, there are perhaps no practical ques- tions, even among those which approach nearest to the character of purely economical questions, which admit of being decided on economical premises alone. And it is because Adam Smith never loses sight of this truth ; because, in his applications of Political Economy, he perpetually appeals to other and often

preface:. 5

far larger considerations than pure Political Economy affords that he gives that well-grounded feeling of command over the principles of the subject for pur- poses of practice, owing to which the " Wealth of Nations ," alone among treatises on Political Econ- omy, has not only been popular with general readers, but has impressed itself strongly on the minds of men of the world and of legislators.

It appears to the present writer, that a work similar in its object and general conception to that of Adam Smith, but adapted to the more extended knowledge and improved ideas of the present age, is the kind of contribution which Political Economy at present requires. The " Wealth of Nations " is in many parts obsolete, and in all, imperfect. Political Economy, properly so called, has grown up almost from infancy since the time of Adam Smith : and the philosophy of society, from which practically that eminent thinker never separated his more peculiar theme, though still in a very early stage of its prog- ress, has advanced many steps beyond the point at which he left it. No attempt, however, has yet been made to combine his practical mode of treating his subject with the increased knowledge since acquired of its theory, or to exhibit the economical phenomena


of society in the relation in which they stand to the best social ideas of the present time, as he did, with such admirable success, in reference to the philoso- phy of his century.

Such is the idea which the writer of the present work has kept before him. To succeed even par- tially in realizing it, would be a sufficiently useful achievement, to induce him to incur willingly all the chances of failure. It is requisite, however, to add, that although his object is practical, and, as far as the nature of the subject admits, popular, he has not attempted to purchase either of those advantages by the sacrifice of strict scientific reasoning. Though he desires that his treatise should be more than a mere exposition of the abstract doctrines of Political Econ- omy, he is also desirous that such an exposition should be found in it.

The present fifth edition has been revised through- out, and the facts, on several subjects, brought down to a later date than in the former editions. Addi' tional arguments and illustrations have been inserted where they seemed necessary, but not in general at any considerable length.




Pbeldonaby Bxmabes, 17



Chapter I. Of the Requisites of Production.

1. Requisites of production, what, . . . . . .45

2. The function of labour defined, 47

3. Does nature contribute more to the efficacy of labour in

some occupations than in others? 49

4. Some natural agents limited, others practically unlimited, in

quantity, .50

Chapter II. Of Lakowr, as an Agent of Production.

§ 1. Labour employed either directly about the thing produced,

or in operations preparatory to its production, . ... 53

2. Labour employed in producing subsistence for subsequent

labour, 55

8. in producing materials, 58

4. or implements, . .60



5. Labour employed in the protection of labour, ... 62

6. in the transport and distribution of the produce, . . 63

7. Labour which relates to human beings, .... 66

8. Labour of invention and discovery, 67

9. Labour agricultural, manufacturing, and commercial, . . 69

Chapter III. Of Unproductive Labour.

1. Labour does not produce objects, but utilities, ... 71

2. which are of three kinds, 78

3. Productive labour is that which produces utilities fixed and

embodied in material objects, 75

4. All other labour, however useful, is classed as unproductive 77 6. Productive and Unproductive Consumption, ... 80 6. Labour for the supply of Productive Consumption, and la- bour for the supply of Unproductive Consumption, . . 81

Chapter IV. Of Capital.

§ 1. Capital is wealth appropriated to reproductive employment, 83

2. More capital devoted to production than actually employed

in it, . 86

3. Examination of some cases illustrative of the idea of Capital, 89

Chapter V. Fundamental Propositions respecting Capital.

§ 1. Industry is limited by Capital, 94

2. but does not always come up to that limit, ... 96

3. Increase of capital gives increased employment to labour,

without assignable bounds, 98

4. Capital is the result of saving, 101

5. All capital is consumed, 103

6. Capital is kept up, not by preservation, but by perpetual re-

production, 107

7. Why countries recover rapidly from a state of devastation, 108

8. Effects of defraying government expenditure by loans, . 110

9. Demand for commodities is not demand for labour, . .114 10. Fallacy respecting Taxation, 124

CONTENTS. 9 Chaffer VI. Of Circulating and Fixed Capital.


§ 1. Fixed and Circulating Capital, what, 127

2. Increase of fixed capital, when at the expense of circulating,

might be detrimental to the labourers, . ... 180

3. this seldom if ever occurs, 134

Chapter VII. On what depends the degree of Productive- ness of Productive Agents.

§ 1. Land, labour, and capital, are of different productiveness at

different times and places, 189

2. Causes of superior productiveness. Natural advantages, . 140

3. greater energy of labour, ...... 142

4. superior skill and knowledge, 145

5. superiority of intelligence and trustworthiness in the com-

munity generally, 147

6. Superior security, 152

Chapter VIII. Of Cooperation, or the Combination of Zabour.

§ 1. Combination of Labour a principal cause of superior produc- tiveness, ...... '. . . . .156

2. Effects of separation of employments analysed, . . . 159 8. Combination of labour between town and country, . .162

4. The higher degrees of the division of labour, . . .164

5. Analysis of its advantages, 166

6. Limitations of the division of labour, 174

Chapter IX, Of Production on a large, and Production on a Small Scale.

1. Advantages of the large system of production in manufac-

tures, . . . . 176

2. Advantages and disadvantages of the joint-stock principle, 182 8. Conditions necessary for the large system of production, . 188 4. Large and small farming compared, 190


Chapter X. Of the Law of the Increase of Labour.


§ 1. The law of the increase of production depends on those of

three elements, Labour, Capital, and Land, . . . 205

2. The Law of Population, 206

3. By what checks the increase of population is practically

limited, 208

Chapter XI. Of the Law of the Increase of Capital.

§ 1. Means and motives to saving, on what dependent, . . 218 2. Causes of diversity in the effective strength of the desire of

accumulation, 215

8. Examples of deficiency in the strength of this desire, . . 218

4. Exemplification of its excess, 226

Chapter XTT. Of the Law of the Increase of Produc- tion from Land.

§ 1. The limited quantity and limited productiveness of land, the

real limits to production, 229

2. The law of production from the soil, a law of diminishing return in proportion to the increased application of labour and capital, 280

8. Antagonist principle to the law of diminishing return ; the

progress of improvements in production, . . 235

Chapter XIII. Consequences of the foregoing Laws.

) 1. Remedies when the limit to production is the weakness of

the principle of accumulation, 243

2. Necessity of restraining population not confined to a state of

inequality of property, .244

8. nor superseded by free trade in food, .... 248 4. nor by emigration, . . 252




Chapter I. Of Property.


§ 1. Introductory remarks, 257

2. Statement of the question, 259

8. Examination of Communism, . . . . . . 262

4. of St. Simonism and Fourierism, 271

Chapter II. The same subject continued.

§ 1. The institution of property implies freedom of acquisition by

contract, 278

2. the validity of prescription, 280

8. the power of bequest, but not the right of inheritance.

Question of inheritance examined, 281

4. Should the right of bequest be limited, and how ? . . 287

5. Grounds of property in land, different from those of prop-

erty in moveables, 291

6. only valid on certain conditions, which are not always

realized. The limitations considered, . . . . 293

7. Eights of property in abuses, 298

Chapter HL Of the Clowes among whom the Produce is distributed.

§ 1. The produce sometimes shared among three classes, . . 801 2. sometimes belongs undividedly to one, .... 802 8. sometimes divided between two, 808

Chapter IV. Of Competition and Custom.

§ 1. Competition not the sole regulator of the division of the prod- uce, 806

2. Influence of custom on rents, and on the tenure of land, . 307

%. Influence of custom on prices, 810


Chapteb V. Of Slavery.


§ 1. Slavery considered in relation to the slaves, . . . 314

2. in relation to production, 316

3. Emancipation considered in relation to the interest of the

slave-owners, 318

Chapter VI. Of Peasant Proprietors.

§ 1. Difference between English and Continental opinions respect- ing peasant properties, 321

2. Evidence respecting peasant properties in Switzerland, . 323

8. in Norway, 330

4. in Germany, 334

6. in Belgium, 340

6. in the Channel Islands, . 345

7. in France, 348

Chapter VII. Continuation of the same subject.

% 1. Influence of peasant properties in stimulating industry, . 354

2. in training intelligence, 357

3. in promoting forethought and self-control, . . . 358

4. Their effect on population, 859

5. on the subdivision of land, 370

Chapter VIII. Of Metayers.

1. Nature of the metayer system, and its varieties, . . . 876

2. Its advantages and inconveniences, 878

3. Evidence concerning its effects in different countries, . . 381

4. Is its abolition desirable ? 393

Chapter IX. Of Cottiers.

1. Nature and operation of cottier tenure, . . . . 396

2. In an overpeopled country its necessary consequence is nomi-

nal rents, . 399

3. which are inconsistent with industry, frugality, or re-

straint on population, 402

4. Ryot tenancy of India, 404


Chapter X. Means of abolishing Cottier Tenancy.


§ 1. Irish cottiers should be converted into peasant proprietors, . 409 2. Inapplicability of this advice to present circumstances, . 417

Chapter XI. Of Wages.

§ 1. Wages depend on the demand and supply of labour in other

words, on population and capital, . ... . . 420

2. Examination of some popular opinions respecting wages, . 421

3. Gertain rare circumstances excepted, high wages imply re-

straints on population, 428

4. which are in some cases legal, 482

5. in others the effect of particular customs, . . . 434

6. Dne restriction of population the only safeguard of a labour-

ing class, 487

Chapter XII. Of Popular Remedies for Low Wages.

§ 1. A legal or customary minimum of wages, with a guarantee of

employment, . . . 442

2. would require as a condition, legal measures for repres- sion of population, . . 444

8. Allowances in aid of wages, . " . . . . . 449

4* The Allotment System, '. . . . . . .461

Chapter XIH. The Remedies for Low Wages further

considered. § 1. Pernicious direction of public opinion on the subject of pop- ulation, 457

2. Grounds for expecting improvement* ..... 460

3. Twofold means of elevating the habits of the labouring peo-

. pie : by education, 466

4. and by large measures of immediate relief, through for-

eign and home colonization, . ..... 467

Chapter XIV. Of the Differences of Wages in different Employments.

§ 1. Differences of wages arising from different degrees of attrac- tiveness in different employments, . 471 3. Differences arising from natural monopolies, . . . 477



8. Effect on wages of a class of subsidized competitors, . . 482

4. of the competition of persons with independent means of

support, 485

5. Wages of women, why lower than those of men, . . . 489

6. Differences of wages arising from restrictive laws, and from

combinations, 491

7. Oases in which wages are fixed by custom, . . . . 492

Chapter XV. Of Profits.

§ 1. Profits resolvable into three parts; interest, insurance, and

wages of superintendence, 495

2. The minimum of profits ; and the variations to which it is

liable, 498

3. Differences of profits arising from the nature of the particu-

lar employment, 500

4. General tendency of profits to an equality, .... 502

5. Profits do not depend on prices, nor on purchase and sale, . 508

6. The advances of the capitalist consist ultimately in wages of

labour, 510

7. The rate of profit depends on the Cost of Labour, . .512

Chapter XVI. Of Rent.

§ 1. Rent the effect of a natural monopoly, 516

2. No land can pay rent except land of such quality or situa-

tion, as exists in less quantity than the demand, . .517

3. The rent of land consists of the excess of its return above

the rata™ to the worst land in cultivation, . . .519

4. or to ^he capital employed in the least advantageous cir-

cumstances, 521

5. Is payment for capital sunk in the soil, rent, or profit ? . 525

6. Bent does not enter into the cost of production of agricul-

tural produce, 531



Chapter I. Of Value.

§ 1. Preliminary remarks, 535

2. Definitions of Value in Use, Exchange Value, and Price, . b37

3. What is meant by general purchasing power, . . . 538



4. Value a relative term. A general rise or fall of Values a

contradiction, 540

5. The laws of Value, how modified in their application to

retail transactions, 541

Chapter II. Of Demand and Supply, in their relation to Value.

1. Two conditions of Value : Utility, and Difficulty of Attain-

ment, 544

2. Three kinds of Difficulty of Attainment, . . . .546

3. Commodities which are absolutely limited in quantity, . 548

4. Law of their value, the Equation of Demand and Supply, . 549

5. Miscellaneous cases falling under this law, .... 552

Chapter III. Of Cost of Production, in its relation to Value.

§ 1. Commodities which are susceptible of indefinite multiplica- tion without increase of cost. Law of their Value, Cost

of Production, . 555

2. operating through potential, but not actual, alterations of

supply, 557

Chapter IV. Ultimate Analysis of Cost of Production.

§ 1. Principal element in Cost of Production— Quantity of La- bour, 562

2. Wages not an element in Cost of Production, . . . 564

3. except in so far as they vary from employment to employ-

ment, 566

4. Profits an element in Cost of Production, in so far as they

vary from employment to employment, .... 568

5. or are spread over unequal lengths of time, . . . 569

6. Occasional elements in Cost of Production : taxes, and

scarcity value of materials, . . . . . . 573

Chapter V. Of Pent, in its Relation to Value.

§ 1. Commodities which are susceptible of indefinite multiplica- tion, but not without increase of cost. Law of their



Value, Cost of Production in the most unfavourable exist- ing circumstances, . 577

2. Such commodities, when produced in circumstances more fa- vourable, yield a rent equal to the difference of cost, . 580 8. Eent of mines and fisheries, and ground-rent of buildings, . 588 4. Gases of extra profit analogous to rent, .... 585

Chapter VI. Swhmary of the Theory of Value.

§ 1. The theory of Value recapitulated in a series of proposi- tions, . . . . . ... . . . 588

. 2. How modified by the case of labourers cultivating for sub- sistence, 501

8. by the case of slave labour, 598


Substance of three articles in the Morning Chronicle of 11th, 18th, and 16th January, 1847, in reply to MM. Mounier and Rubichon and to the Quarterly Review, on the Sub- division of Landed Property in France, . . . 597




In every department of human affairs, Practice long precedes Science: systematic enquiry into the modes of action of the powers of nature, is the tardy product of a long course of efforts to use those powers for practical ends. The conception, accordingly, of Political Economy as a branch of science, is extremely modern ; but the subject with which its enquiries are conversant has in all ages necessarily constituted one of the chief practical interests of mankind, and, in some, a most unduly engrossing one.

That subject is Wealth. Writers on Political Economy profess to teach, or to investigate, the nature of Wealth, and the laws of its production and distribution: including, directly or remotely, the operation of all the causes by which the condition of mankind, or of any society of human beings, in respect to this universal object of human desire, is made prosperous or the reverse. Not that any treatise on Political Economy can discuss or even enumerate all these causes ; but it undertakes to set forth as much as is known of the laws and principles according to which they operate.


Every one has a notion, sufficiently correct for common purposes, of what is meant by wealth. The enquiries which relate to it are in no danger of being confounded with those relating to any other of the great human interests. All know that it is one thing to be rich, another thing to be enlightened, brave, or humane; that the questions how a nation is made wealthy, and how it is made free, or vir- tuous, or eminent in literature, in the fine arts, in arms, or in polity, are totally distinct enquiries. Those things, indeed, are all indirectly connected, and react upon one another. A people has sometimes become free, because it had first grown wealthy ; or wealthy, because it had first become free. The creed and laws of a people act power- fully upon their economical condition ; and this again, by its influence on their mental development and social rela- tions, reacts upon their creed and laws. But though the subjects are in very close contact, they are essentially different, and have never been supposed to be otherwise.

It is no part of the design of this treatise to aim at meta: physical nicety of definition, where the ideas suggested by a term are already as determinate as practical purposes re- quire. But, little as it might be expected that any mis- chievous confiision of ideas could take place on a subject so simple as the question, what is to be considered as wealth, it is matter of history that such confusion of ideas has ex- isted— that theorists and practical politicians have been equally, and at one period universally, infected by it, and that for many generations it gave a thoroughly false direc- tion to the policy of Europe. I refer to the set of doctrines designated, since the time of Adam Smith, by the appella- tion of the Mercantile System.

While this system prevailed, it was assumed, either ex- pressly or tacitly, in the whole policy of nations, that wealth consisted solely of money ; or of the precious metals, which, when not already in the state of money, are capable of being directly converted into it. According to the doctrines then prevalent, whatever tended to heap up money or bullion in


a country added to its wealth. Whatever sent the precious metals out of a country impoverished it. If a country pos- sessed no gold or silver mines, the only industry by which it could be enriched was foreign trade, being the only one which could bring in money. Any branch of trade which was supposed to send out more money than it brought in, however ample and valuable might be the returns in another shape, was looked upon as a losing trade. Exportation of goods was favoured and encouraged (even by means ex- tremely onerous to the real resources of the country), be- cause, the exported goods being stipulated to be paid for in money, it was hoped that the returns would "actually be made in gold and silver. Importation of anything, other than the precious metals, was regarded as a loss to the nation of the whole price of the things imported ; unless they were brought in to be re-exported at a profit, or unless, being the materials or instruments of some industry practised in the country itself, they gave the power of producing exportable articles at smaller cost, and thereby effecting a larger ex- portation. The commerce of the world was looked upon as a struggle among nations, which could draw to itself the largest share of the gold and silver in existence ; and in thiB competition no nation could gain anything, except by making others lose as much, or, at the least, preventing them from gaining it.

It often happens that the universal belief of one age of mankind a belief from which no one was, nor without an extraordinary effort of genius and courage, could at that time be free becomes to a subsequent age so palpable an absurd- ity, that the only difficulty then is to imagine how such a thing can ever have appeared credible. It has so happened with the doctrine that money is synonymous with wealth. The conceit seems too preposterous to be thought of as a serious opinion. It looks like one of the crude fancies of childhood, instantly corrected by a word from any grown person. But let no one feel confident that he should have escaped the delusion if he had lived at the time when it pre-


vailed. All the associations engendered by common life> and by the ordinary course of business, concurred in favour- ing it. So long as those associations were the only medium through which the subject was looked at, what we now think so gross an absurdity seemed a truism. Once ques- tioned, indeed, it was doomed; but no one was likely to think of questioning it whose mind had not become familiar with certain modes of stating and of contemplating econom- ical phenomena, which have only found their way into the general understanding through the influence of Adam Smith and of his expositors.

In common discourse, wealth is always expressed in money. If you ask how rich a person is, you are answered that he has so many thousand pounds. All income and expenditure, all gains and losses, everything by which one becomes richer or poorer, are reckoned as the coining in or going out of so much money. It is true that in the in- ventory of a person's fortune are included, not only the money in his actual possession, or due to him, but all other articles of value. These, however, enter, not in their own character, but in virtue of the sums of money which they would sell for ; and if they would sell for less, their owner is reputed less rich, though the things themselves are pre- cisely the same. It is true, also, that people do not grow rich by keeping their money unused, and that they must be willing to spend in order to gain. Those who enrich them- selves by commerce, do so by giving money for goods as well as goods for money ; and the first is as necessary a part of the process as the last. But a person who buys goods for purposes of gain, does so to sell them again for money, and in the expectation of receiving more money than he laid out : to get money, therefore, seems even to the person him- self the ultimate end of the whole. It often happens that he is not paid in money, but in something else; having bought goods to a value equivalent, which are set off against those he sold. But he accepted these at a money valuation, and in the belief that they would bring in more money


eventually than the price at which they were made over to him. A dealer doing a large amount of business, and turn- ing over his capital rapidly, has but a small portion of it in ready money at any one time. But he only feels it valuable to him as it is convertible into money: he considers no transaction closed until the net result is either paid or cred- ited in money: when he retires from business it is into money that he converts the whole, and not until then does he deem himself to have realized his gains : just as if money were the only wealth, and money's worth were only the means of attaining it. If it be now asked for what end money is desirable, unless to supply the wants or pleasures of oneself or others, the champion of the system would not be at all embanrassed by the question. True, he would say, these are the uses of wealth, and very laudable uses while confined to domestic commodities, because in that case, by exactly the amount which you expend, you enrich others of your countrymen. Spend your wealth, if you please, in whatever indulgences you have a taste for ; but your wealth is not the indulgences, it is the sum of money, or the annual money income, with which you purchase them.

While there were so many things to render the assump- tion which is the basiB of the mercantile system plausible, there is also some small foundation in reason, though a very insufficient one, for the distinction which that system so emphatically draws between money and eve»*v other kind of valuable possession. We really, and justly, look upon a person as possessing the advantages of wealth, not in propor- tion to the useful and agreeable things of which he is in the actual enjoyment, but to his command over the general fond of things useful and agreeable; the power he possesses of providing for any exigency, or obtaining any object of desire. Now, money is itself that power ; while all other things, in a civilized state, seem to confer it only by their capacity of being exchanged for money. To possess any other article of wealth, is to possess that particular thing, and nothing else : if you wish for another thing instead of


it, you have first to sell it, or to submit to the inconvenience and delay (if not the impossibility) of finding some one who has what you want, and is willing to barter it for what you have. But with money you are at once able to buy what- ever things are for sale ; and one whose fortune is in money, or in things rapidly convertible into it, seems both to him- self and others to possess not any one thing, but all the things which the money places it at his option to purchase. The greatest part of the utility of wealth, beyond a very moderate quantity, is not the indulgences it procures, but the reserved power which its possessor holds in his hands of attaining purposes generally ; and this power no other kind of wealth confers so immediately or so certainly as money. It is the only form of wealth which is not merely applicable to some one use, but can be turned at once to any use. And this distinction was the more likely to make an impression upon governments, as it is one of considerable importance to them. A civilized government derives comparatively little advantage from taxes unless it can collect them in money : and if it has large or sudden payments to mpke, especially payments in foreign countries for wars or subsi- dies, either for the sake of conquering or of not being con- quered (the two chief objects of national policy until a late period), scarcely any medium of payment except money will serve the purpose. All these causes conspire to make both individuals and governments, in estimating their means, attach almost exclusive importance to money, either in esse or in posse, and look upon all other things (when viewed as part of their resources) scarcely otherwise than as the re- mote means of obtaining that which alone, when obtained, affords the indefinite, and at the same time instantaneous, command over objects of desire, which best answers to the idea of wealth.

An absurdity, however, does not cease to be an absurd- ity when we have discovered what were the appearances which made it plausible ; and the Mercantile Theory could not fail to be seen in its true character when men began,


even in an imperfect manner, to explore into the founda- tions of things, and seek their premises from elementary facts, and not from the forms and phrases of common dis- course. So soon as they asked themselves what is really meant by money what it is in its essential characters, and the precise nature of the functions it performs they reflect- ed that money, like other things, is only a desirable posses- sion on account of its uses ; and that these, instead of being, as they delusively appear, indefinite, are of a strictly defined and limited description, namely, to facilitate the distribution of the produce of industry jaccording to the convenience of those among whom it is shared. Further consideration showed that the uses of money are in no respect promoted by increasing the quantity which exists and circulates in a country ; the service which it performs being as well ren- dered by a small as by a large aggregate amount. Two million quarters of corn will not feed so many persons as four millions ; but two millions of pounds sterling will carry on as much traffic, will buy and sell as many commodities, as fpur millions, though at lower nominal prices. Money, as money, satisfies no want ; its worth to any one, consists in its being a convenient shape in which to receive his incomings of all sorts, which incomings he afterwards, at the times which suit him best, converts into the forms in which they can be useful to him. The difference between a country with money, and a country altogether without it, would be only one of convenience ; a saving of time and trouble, like grinding by water instead of by hand, or (to use Adam Smith's illustration) like the benefit derived from roads ; and to mistake money for wealth, is the same sort of error as to mistake the highway which may be the easiest way of getting to your house or lands, for the house and lands themselves.

Money, being the instrument of an important public and private purpose, is rightly regarded as wealth ; but every- thing else which serves any human purpose, and which nature does not afford gratuitously, is wealth also. To be


wealthy is to have a large stock of useful articles, or the means of purchasing them. Everything forms therefore a part of wealth, which has a power of purchasing ; for which anything useful or agreeable would be given in exchange. Things for which nothing could be obtained in exchange, however useful or necessary they may be, are not wealth in the sense in which the term is used in Political Economy. Air, for example, though the most absolute of necessaries, bears no price in the market, because it can be obtained gratuitously ; to accumulate a stock of it would yield no profit or advantage to any one ; and the laws of its produc- tion and distribution are the subject of a very different study from Political Economy. But though air is not wealth, mankind are much richer by obtaining it gratis, since the time and labour which would otherwise be required for sup- plying the most pressing of all wants, can be devoted to other purposes. It is possible to imagine circumstances in which air would be a part of wealth. If it became custom- ary to sojourn long in places where the air does not natu- rally penetrate, as in diving-bells sunk in the sea, a supply of air artificially furnished would, like water conveyed into houses, bear a price : and if from any revolution in nature the atmosphere became too scanty for the consumption, or could be monopolized, air might acquire a very high market- able value. In such a case, the possession of it, beyond his own wants, would be, to its owner, wealth ; and the general wealth of mankind might at first sight appear to be in- creased, by what would be so great a calamity to them. The error would lie in not considering, that however rich the possessor of air might become at the expense of the rest of the community, all persons else would be poorer by all that they were compelled to pay for what they had before obtained without payment.

This leads to an important distinction in the meaning of the word wealth, as applied to the possessions of an individ- ual, and to those of a nation, or of mankind. In the wealth of mankind, nothing is included which does not of itself


answer some purpose of utility or pleasure. To an individu- al, anything is wealth, which, though useless in itself, en- ables him to claim from others a part of their stock of things useful or pleasant. \ Take, for instance, a mortgage of a thousand pounds on a landed estate. This is wealth to the person to whom it brings in a revenue, and who could perhaps sell it in the market for the full amount of the debt. But it is not wealth to the country ; if the engagement were annulled, the country would be neither poorer nor richer. The mortgagee would have lost a thousand pounds, and the owner of the land would have gained it. Speaking nation- ally, the mortgage was not itself wealth, but merely gave A a claim to a portion of the wealth of B. It was wealth to A, and wealth which he could transfer to a third person ; but what he so transferred was in fact a joint ownership, to the extent of a thousand pounds, in the land of which B was nominally the sole proprietor. The position of fundholders, or owners of the public debt of a country, is similar. They are mortgagees on the general wealth of the country. The cancelling of the debt would be no destruction of wealth, but a transfer of it : a wrongful abstraction of wealth from certain members of the community, for the profit of the government, or of the tax-payers. Funded property there- fore cannot be counted as part of the national wealth. This is not always borne in mind by the dealers in statistical cal- culations. For example, in estimates of the gross income of the country, founded on the proceeds of the income tax, incomes derived from the funds are not always excluded : though the tax-payers are assessed on their whole nominal income, without being