ductive; its utility consists in the employment of capital, warehouses, care in the preservation, in short, human industry in the withdrawing from circulation a commodity depressed in value by temporary superabundance, and thereby reduced in price below the charges of production, so as to discourage its production, with the design and purpose of restoring it to circulation when it shall become more scarce, and when its price shall be raised above the natural price, the charges of production, so as to throw a loss upon the consumers. The evident operation of this kind of trade is, to transport commodities in respect of time, instead of locality. If it prove an unprofitable or losing concern, it is a sign that it was useless in the particular instance, and that the commodity was not redundant at the time of purchase, and scarce at the time of re-sale. This operation has also been denominated, with much propriety, the trade of reserve. (a) Where it is directed to the buying up of the whole of an article, for the sake of exacting an exorbitant monopoly price, it is called fore-stalling, which is happily difficult, in proportion as the national commerce is extensive, and, consequently, the commodities in circulation both abundant and various.

The carrying trade, as Smith calls it, consists in the purchase of goods in one foreign market for re-sale in another foreign market. This class of industry is beneficial not only to the merchant that practises it, but also to the two nations between whom it is practised; and that for reasons which have been explained while treating of external commerce. The carrying trade is but little suited to nations possessed of small capital, whereof the whole is wanted to give activity to internal industry, which is always entitled to the preference. The Dutch carry it on in ordinary times with advantage, because their population and capital are both redundant. (b) French, in peace time, have carried on a lucrative carrying trade between the different ports of the Levant; because adventurers could procure advances of capital on better terms in France than in the Levant, and were perhaps less exposed to the oppression of the detestable government of that country. They have since been supplanted by other nations, whose possession of the carrying trade is so far from being an injury to the subjects of the Porte, that it actually keeps alive the little remaining industry of its territories. Some governments,

The

(a) Commerce de reserve. There is no corresponding term in English; it is intelligible enough. T.

(b) The carrying trade of Holland is now almost extinct. In fact, whether or no it be suited to a given nation at a given time, depends upon a great variety of circumstances. The advantage of the neutral character gave a very large proportion of it for some years to the American Union, though notoriously deficient in capital for the purposes of internal cultiva

tion. T.

less wise in this particular than the Turkish, have interdicted their carrying trade to foreign adventurers. If the native traders can carry on the transport to greater profit than foreigners, there is no occasion to exclude the latter; and, if it can be conducted cheaper by foreigners, their exclusion is a voluntary sacrifice of the profit of employing them. An example will serve to elucidate this position. The freight of hemp from Riga to Havre costs a Dutch skipper, say 35 fr. per ton. It must be taken for granted, that no other but the Dutchman can carry it so cheap. He makes a tender to the French government, which is a consumer of Russian hemp, to provide tonnage at 40 fr. per ton, thereby obviously securing to himself a profit of 5 fr. per ton. Suppose then, that the French government, with a view to favour the national shipping, prefers to employ French tonnage, which can not be navigated for less than 50 fr. per ton, or 55 fr., allowing the same profit to the ship-owner-What is the consequence? The government will be out of pocket 15 fr. per ton, for the mere purpose of giving a profit of 5 fr. to the national ship owners. And, as none but the individuals of the nation contribute towards the national expenditure, this operation will have cost to one class of Frenchmen 15 fr., for the purpose of giving to another class of Frenchmen a profit of 5 fr. only. However the numbers may vary, the result must be similar; for there is but one fair way of stating the account.

It is hardly necessary to caution the reader, that I have throughout been considering maritime industry solely in its relation to national wealth. Its influence upon national security is another thing. The art of navigation is an expedient of war, as well as of commerce. The working of a vessel is a military manœuvre; and the nation containing the larger proportion of seamen, is, therefore, ceteris paribus, the more powerful in a military point of view; consequently, political and military considerations have always interfered with national views of commerce in matters of navigation; and England, in passing her celebrated Navigation Act, interdicting her carrying trade to all vessels, the owners and at least three-fourths of the crews whereof were not British subjects, had in view, not so much the profits of the carrying trade, as the increase of her own military marine, and the diminution of that of the other powers, especially of Holland, which then enjoyed an immense carrying trade, and was the chief object of English jealousy.

Nor can it be denied, that these views may actuate a wise national administration; assuming always, that it is an advantage to one nation to domineer over others. But these political dogmas are fast growing obsolete. Policy will some day or other be held to consist in coveting the pre-eminence of merit rather than of force. The love of domination never attains more than a factitious elevation, that is sure to make enemies of all its neighbours. It is this that engenders national debt,

internal abuse, tyranny and revolution; while the sense of mutual interest begets international kindness, extends the sphere of useful intercourse, and leads to a prosperity, permanent, because it is natural.(1)

CHAPTER X.

OF THE TRANSFORMATIONS UNDERGONE BY CAPITAL IN THE

PROGRESS OF PRODUCTION.

We have seen above (Chap. iii.) of what the productive capital of a nation consists, and to what uses it is applicable. So much it was necessary to specify, in enumerating the various means of production. We now come to consider and exa

(1) [The operation of the British Navigation-acts, like all other restrictive regulations, has been prejudicial to the growth of the national wealth, without, at the same time, having contributed, in any degree to the establishment of the naval preponderance of Great Britain. "If it can be made to appear," says a highly distinguished political economist, "that the greater wealth which we should, in the absence of these laws, have possessed, would have supplied a revenue adequate to the maintenance of an equal number of seamen in the navy, it would follow that we are no gainers by these acts; and if it further appear that this additional revenue would have been equal to the maintenance of twice or three times as many seamen, it would be clear that we are losers by them. It is acknowledged by many of the advocates for these laws, that their tendency has not been to increase the national revenue, but in some degree the reverse.

"Our naval preponderance," says, we believe, Mr. Horner, "rests on a very different basis. Our national energy and wealth originate in our freedom, and in that security of property which is its happy consequence. The number of our seamen in merchant shipping is owing to the spirit and capital of our traders, and to our great extent of coast. The magnitude of our navy is due neither to navigation-acts, nor to colonial monopolies, but to the resources of an industrious country.

"How different are the ideas suggested by such observations, from the narrow theories of those who trace our naval superiority to the operation of a few acts of Parliament! They remind us of the technical philosophy of the judge, who gravely ascribed the lamentable prevalence of duelling, not to the violence of human passions, but to a misapprehension of the law of the land! Besides, our naval greatness, as is well remarked by Dr. Smith, was conspicuous before our navigation laws were framed. It existed then, as it had done before, and has done since, in a degree commensurate with our commerce, and with the extent of our national prosperity. These circumstances, and not navigation laws, will be found the regulators of naval power in all countries. They determined its extent among the Dutch, to whom, even in the season of their greatest strength, navigation laws were entirely unknown." Vide Edinburgh Review, vol. xiv. page 95.] AMERICAN EDITOR.

mine, what becomes of capital in the progress of production, and how it is perpetuated and increased.

To avoid fatiguing the reader with abstract speculation, I shall begin with giving examples, which I shall take from every day's experience and observation. The general principles will follow of themselves, and the reader will immediately see their applicability to all other cases, which he may have occasion to pronounce a judgment upon.

When the land-owner is himself the cultivator, he must possess a capital over and above the value of his land; that is to say, value to some amount or other consisting, in the first place, of clearance of the ground, together with works and erections thereon, which may at pleasure be looked upon as part of the value of the estate, but which are, nevertheless, the result of previous human exertion, and an accession to the original value of the land.*

This portion of his capital is little subject to wear and tear; trifling occasional repairs will preserve it entire. If the cultivator obtain from the annual produce wherewithal to effect these repairs, this item of capital is thereby preservable in perpetuity.

Ploughs, and other farming implements and utensils, together with the animals employed in tillage, form another item of the cultivator's capital, and an item of much quicker consumption, which, however, may in like manner be kept up and renovated, as occasion may require, at the expense of the annual produce of the concern, and thus be maintained at its full original amount.

Finally, he must have stores of various kinds; seeds for his ground, provisions, fodder for his cattle, and food as well as money for his labourers' wages, &c.† Observe, that this branch of capital is totally decomposed once in the course of the year at least; and sometimes three or four times over. The money, grain, and provisions of every description, disappear altogether; but so it must necessarily be; and yet not an atom of

Arthur Young, in his View of the Agriculture of France, makes no estimate of this item of capital permanently vested in the land of France within its old limits; but merely reckons it to be less than the capital so vested in England, in the proportion of 36 livres tournois per English acre. So that, in the very moderate supposition, that half as much capital is vested in permanent amelioration of the land in France as in England, the capital so vested in Old France, reckoned at 36 francs per acre, would amount, upon 131 millions of acres, to 4716 millions of francs, for this item of French capital alone.

The same writer (Young) estimates, that in France, these two last items of capital, viz. implements, beasts of husbandry, stores of provisions, &c. may be set down at 48 francs per acre, one acre with another; making an aggregate of 6288 millions of francs; which, added to the former estimate, shows a total of 11,000 millions of francs, capital engaged n the agricultural industry of Old France. He estimates the same items of capital in England at twice as much per acre,

the capital is lost, if the cultivator, after subtracting from the produce a fair allowance for the productive service of his land (rent), for the productive service of the capital embarked (interest), and for the productive service of the personal labour that has set the whole in motion (wages), contrive to make the annual produce replace the outlay of money, seed, live stock, &c., even to the article of manure, so as to put himself in possession of a value equal to what he started with the preceding year.

Thus we find, that capital may yet be kept up, though almost every part of it have undergone some change, and many parts be completely annihilated; for, indeed, capital consists not in this or that commodity or substance, but in its value.

Nor is it difficult to conceive, that if the estate be sufficiently extensive, and managed with order, economy, and intelligence, the profits of the cultivator may enable him to lay by a surplus, after replacing the entire value of his capital, and defray ing the expenses of himself and family. The mode of disposing of this surplus is of the utmost importance to the community, and will be treated of in the next chapter. All that is at present necessary is, to impress a clear conviction, that the value of capital, though consumed, is yet not destroyed, wherever it has been consumed in such way as to re-produce itself; and that a concern may go on forever, and annually render a new product with the same capital, although that capital be in a perpetual course of consumption.

After tracing capital through its various transformations in the department of agriculture, it will be easy to follow its transformations in the other two departments of manufacture and commerce.

In manufacture, as well as agriculture, there are some branches of capital that last for years; buildings and fixtures for instance, machinery and some kinds of tools; others, on the contrary, lose their form entirely; the oil and pot-ash used by soap-makers cease to be oil and pot-ash when they assume the form of soap. In the same manner, the drugs employed in dyeing indigo cease to be Brazil wood or annatto, as the case may be, and are incorporated with the fabric they are employed in colouring. And so of the wages and maintenance of the labourers.

In commerce, almost the whole capital undergoes complete transmutation, and many items of it several times in the course of a year. A merchant exchanges his specie for woollens or jewellery, which is one change of form. He ships them for Turkey, and, on the voyage, some more of his money is converted into the wages of the crew. The cargo arrives at Constantinople, where he sells the investment to the wholesale dealers, who pay him in bills upon Smyrna, which is a second metamorphosis; the capital embarked is now in the shape of bills, which he makes use of in the purchase of cotton at Smyrna; a third transformation. The cotton is shipped for