In the employment of machinery, which wonderfully augments the productive power of man, the product obtained is due partly to the value of the capital vested in the machine, and partly to the agency of natural powers. Suppose a walking-wheel, worked by ten men, to be used in place of a windmill, the product of the mill might be considered as the fruit of the productive agency of a capital consisting of the value of the machine, and of the labour of ten men employed in turning the wheel. If the walking-wheel be supplanted by sails, it is evident that the wind, a natural agent, does the work of ten human beings. In this instance, the absence of the natural agent might be remedied, by the employment of another power; but there are many cases, in which the agency of nature could not possibly be dispensed with, and is yet equally positive and real: for example, the vegetative power of the soil, the vital principle which concurs in the production of the animals domesticated to our use. A flock of sheep is the joint result of the owner's and shepherd's care, and the capital advanced in fodder, shelter, and shearing, and of the action of the organs and viscera with which nature has furnished these animals. Thus nature is commonly the fellow labourer of man and his instruments; a fellowship advantageous to him in proportion as he succeeds in dispensing with his own personal agency, and that of his capital, and in throwing upon nature a larger part of the burthen of production. Smith has taken infinite pains to explain, how it happens that civilized communities enjoy so great an abundance of products, in comparison with nations less polished, and in spite of the swarm of idlers and unproductive labourers, that is to be met with in society. He has traced the source of that abundance to the division of labour;t and it can not be doubted, that the productive power of industry is wonderfully enhanced by that division, as we shall hereafter see by following his steps; but this circumstance alone is not sufficient to explain a phenomenon, that will no longer surprise, if we consider the power of the natural agents that industry and civilization set at work for our advantage. Smith admits that human intelligence, and the knowledge of the laws of nature, enable mankind to turn the resources she offers to better account: but he goes on to attribute to the value and efficacy of the agency of these two productive agents. The world at large may be content to comprehend, without taking the trouble of measuring their respective shares in the production of wealth. A wheel in form of a drum, turned by men walking inside, (roue d marchre.) Take his own words: "It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence, which extends itself to the lowest ranks of the people." Wealth of Nations, b. i. c. 1. division of labour this very degree of intelligence and knowledge; and he is right to a certain degree; for a man, by the exclusive pursuit of a single art or science, has ampler means of accelerating its progress towards perfection. But, when once the system of nature is discovered, the production resulting from the discovery, is no longer the product of the inventor's industry. The man who first discovered the property of fire to soften metals, was not the actual creator of the utility this process adds to smelted ore. That utility results from the physical action of fire, in concurrence, it is true, with the labour and capital of those who employ the process. But are there no processes that mankind owes the knowledge of to pure accident? or that are so self-evident, as to have required no skill to discover? When a tree, a natural product, is felled, is society put into possession of no greater produce than that of the mere labour of the woodman? From this error Smith has drawn the false conclusion, that all values produced represent pre-exerted human labour or industry, either recent or remote; or, in other words, that wealth is nothing more than labour accumulated; from which position he infers a second consequence equally erroneous, viz. that labour is the sole measure of wealth, or of value produced. This system is obviously in direct opposition to that of the Economists of the eighteenth century, who on the contrary, maintained that labour produces no value without consuming an equivalent; that, consequently, it leaves no surplus, no net produce; and that nothing but the earth produces gratuitous value, therefore nothing else can yield net produce. Each of these positions has been reduced to system; I only cite them to warn the student of the dangerous consequences of an error in the outset, and to bring the science back to the simple observation of facts. Now facts demonstrate, that values produced are referable to the agency and concurrence of industry, of capital,† and of natural agents, whereof the chief, though by * Amongst other dangerous consequences of the system of the Economists, is the notable one of substituting a land-tax in lieu of all other taxation; in the certainty, that this tax would affect all produced value whatever. Upon a contrary principle, and in pursuance of the maxims laid down by Smith, the net produce of land and of capital ought to be exempted from taxation altogether, if with him we take for granted, that they produce nothing spontaneously; but this would be as unjust on the opposite side. † Although Smith has admitted the productive power of land, he has disregarded the completely analogous power of capital. A machine, an oilmill for example, which employs a capital of 20,000 fr., and gives an annual net return of 1000 fr., after paying all expenses, gives a product quite as substantial as that of a real estate, that cost 20,000 fr., and brings an annual rent or net produce of 1000 fr., all charges deducted. Smith maintains, that a mill which has cost 20,000 fr., represents labour to that amount, bestowed at sundry times upon the different parts of its fabric; therefore, that the net produce of the mill is the net produce of that precedent labour. But he is mistaken: granting, for argument sake, the value of the mill itself to be the value of this previous labour; yet the value daily produced by the no means the only one, is land capable of cultivation; and that no other but these three sources can produce value, or add to human wealth. Of natural agents, some are susceptible of appropriation, that is to say, of becoming the property of an occupant, as a field, a current of water; others can not be appropriated, but remain liable to public use, as the wind, the sea, free navigable streams, the physical or chemical action of bodies one upon another, &c. &c. We shall by and by have an opportunity of convincing ourselves, that this alternative, of productive agents being or not being susceptible of appropriation, is highly favourable to the progress of wealth. Natural agents, like land, which are susceptible of appropriation, would not produce nearly so much, were not the proprietors certain of exclusively gathering their produce, and able to vest in them, with full confidence, the capital which so much enlarges their productiveness. On the other hand, the indefinite latitude allowed to industry to occupy at will the unappropriated natural agents, opens a boundless prospect to the extension of her agency and production. It is not nature, but ignorance and bad government, that limit the productive powers of industry. Such of the natural agents as are susceptible of appropriation, form an item of productive means; for they do not yield their concurrence without equivalent; which equivalent, as we shall see in the proper place, forms an item of the revenues of the appropriators. At present we must be content to investigate the productive operation of natural agents of every description, whether already known, or hereafter to be dis covered. CHAPTER V. OF THE MODE IN WHICH INDUSTRY, CAPITAL, AND NATURAL AGENTS UNITE FOR THE PURPOSE OF PRODUCTION. We have seen how industry, capital and natural agents concur in production, each in its respective department; and mill is a new value altogether; just the same, as the rent of a landed estate is a totally different value from the value of the estate itself, and may be consumed, without at all affecting the value of the estate. If capital contained itself no productive faculty, independent of that of the labour which created it, how is it possible, that capital could furnish a revenue in perpetuity, independent of the profit of the industry that employs it? The labour that created the capital would receive wages after it ceased to operate, -would have interminable value; which is absurd. It will be seen by and by, that these notions have not been mere matter of speculation. we have likewise seen, that these three sources are indispensable to the creation of products. It is not, however, absolutely necessary that they should all belong to the same individual. An industrious person may lend his industry to another possessed of capital and land only. The owner of capital may lend it to an individual possessing land and industry only. The landholder may lend his estate to a person possessing capital and industry only. Whether the thing lent be industry, capital, or land, inasmuch as all three concur in the creation of value, their use also bears value, and is commonly paid for. The price paid for the loan of industry is called wages. The ownership of land, capital, and industry are sometimes united in the same hands. A man who cultivates his own garden at his own expense, is at once the possessor of land, capital and industry, and exclusively enjoys the profit of proprietor, capitalist, and labourer. The knife-grinder's craft requires no occupancy of land; he carries his stock in trade upon his shoulders, and his skill and industry at his fingers' ends; being at the same time adventurer,(a) capitalist, and labourer. It is seldom that we meet with adventurers in industry so poor, as not to own at least a share of the capital embarked in their concern. Even the common labourer generally advances some portion; the bricklayer comes with his trowel in his hand; the journeyman tailor is provided with thimble and needles; all are clothed better or worse; and though it be true, that their clothing must be found out of their wages, still they find it themselves in advance. Where the land is not exclusive property, as is the case with some stone quarries, with public rivers and seas to which industry resorts for fish, pearls, coral, &c. products may be obtained by industry and capital only. Industry and capital are likewise competent to produce by themselves, when that industry is employed upon products of foreign growth, procurable by capital only; as in the European manufacture of cotton and many other articles. So that every class of manufacture is competent to raise products, provided there be industry and capital exerted. The presence of land (a) The term entrepreneur is difficult to render in English; the corresponding word, undertaker, being already appropriated to a limited sense. It signifies, the master-manufacturer in manufacture, the farmer in agriculture, and the merchant in commerce; and generally in all three branches, the person who takes upon himself the immediate responsibility, risk, and conduct of a concern of industry, whether upon his own or a borrowed capital. For want of a better word, it will be rendered into English by the term adventurer. T. is not absolutely necessary, unless perhaps the area whereon the work is done, and which is commonly rented, may be thought to come under this description, as in extreme strictness it certainly must. However, if the ground where the business of industry is carried on, be reckoned as land used, - it must at least be admitted, that, with aid of a large capital, an immense manufacturing concern may be conducted upon a very trifling spot of ground. Whence this conclusion may be drawn, that national industry is limited, not by territorial extent, but by extent of capital. A stocking manufacturer with a capital, say of 20,000 fr., may keep in constant work ten stocking frames. If he manages to double his capital, he can employ twenty; that is to say, he may buy ten more frames, pay double ground-rent, purchase double the quantity of silk or cotton to be wrought into stockings, and make the requisite advances to double the number of workmen, &c. &c. But that portion of agricultural industry, devoted to the tillage of land, is, in the course of nature limited by extent of surface. Neither individuals nor communities can extend or fertilize their territory, beyond what the nature of things permits; but they have unlimited power of enlarging their capital, and, consequently, of setting at work a larger body of industry, and thus of multiplying their products; in other words, their wealth. There have been instances of people, like the Genevese, who with a territory that has not produced the twentieth part of the necessaries of life, have yet contrived to live in affluence. The natives of the barren glens of Jura are in easy circumstances, because many mechanical arts are there practised. In the 13th century, the world beheld the republic of Venice, ere it held a foot of land in Italy, derive wealth enough from its commerce to possess itself of Dalmatia, together with most of the Greek isles, and even the capital of the Greek empire. The extent and fertility of a nation's territory depend a good deal upon its fortunate position. Whereas the power of its industry and capital depends upon its own good management; for it is always competent to improve the one and augment the other. Nations deficient in capital labour under great disadvantage in the sale of their produce; being unable to sell at long credit, or to grant time or accommodation to their home or foreign customers. If the deficiency be very great indeed, they may be unable even to make the advance of the raw material and their own industry. This accounts for the necessity, in the Indian and Russian trade, of remitting the purchase-money six months or sometimes a year in advance, before the time when an order for goods can be executed. These nations must be highly favoured in other respects, or they never could make considerable sales in the face of such a disadvantage. Having informed ourselves of the method in which the three |