those of the Ricardo-Malthusian school. "When," as he says, "the most fertile and best situated lands have all been occupied, less profit can be made by the cultivation of what is inferior both in soil and situation, and less interest can be afforded for the stock which is so employed."*

Unfortunately for this theory, the facts are directly the reverse -the first poor colonist commencing, invariably, with the poorer lands; and it being only as he obtains improved machinery, that he is enabled to cultivate the richer soils. Precisely as he does this, the rate of interest falls. The larger the return to labor, the greater is the facility for obtaining money by means of which to circulate its products. the rate of interest tending to decline with every increase in the power to command the commodity for whose use it is paid.

This erroneous idea of Dr. Smith led him, necessarily, into many contradictions of himself. Thus, after assuring his readers that interest falls in countries growing in wealth and population -because of the steadily increasing necessity for applying labor to the cultivation of poorer soils - he tells them, that it is in countries in which the wages of labor are low that interest is high; as in Bengal, where the farmer pays forty, fifty, or sixty per cent.; or as it was in Sicily when Brutus claimed only fortyeight. It is difficult, however, to imagine anything better calculated to produce these low wages, and consequent high interest, than the very circumstances described as invariably accompanying the growth of wealth and decline of interest-a growing necessity for applying labor to soils yielding, from year to year, less in return to labor. To look, however, to either Hume or Smith, for consistency in any portion of their works in which they treat of money, would be as much labor lost, as would be the search for it in the works of Ricardo and Malthus, treating of the growth of wealth and population.

All the facts offered for consideration by both the present and the past, tend to prove the universal truth of the proposition, that the rate of profit, and the rate of interest, tend, of necessity, to decline, as the prices of raw materials tend more closely towards approximation. The people of the United States give a constantly increasing quantity of wheat, rice, flour, cotton, * Wealth of Nations, book 1, chap. xi.

and tobacco, for a diminishing one of gold, silver, iron, lead, and other metals; and hence it is that their rate of interest is so high.*

§ 12. Mr. Mill is of opinion that "there is at every time and place some particular rate of profit, which is the lowest that will induce the people of that country and time to accumulate savings, and to employ those savings productively"— that minimum varying "according to circumstances." It is, however, when people are most driven to saving, that they are most inclined to hoard, and least disposed to employ their means in any manner tending to benefit either the community or themselves. Saving implies stoppage of circulation; whereas, the profitable employment of capital involves an increase in its rapidity-the two things being wholly inconsistent with each other. Four per cent. is the point at which people are willing to save, in England-that rate being now, in Mr. Mill's opinion, as much productive of the hoarding propensity at the present time, as was forty per cent. in the reign of King John, or as is that rate in the present day, in the Burmese empire. Such a rate, as he says, "always exists;" and "when once it is reached, no further increase of capital can for the present take place."†

The total absence of consistency in the doctrines of the RicardoMalthusian school, is here most clearly obvious. Having first subjected man to a great law of nature, in virtue of which labor becomes from year to year less productive, and accumulation less possible, we next are told, that men are willing to save in one part of the world, provided they can obtain four per cent.; whereas,

* Both interest and wages being low in Holland, and both being high in the United States, it might be supposed that these cases formed exceptions to the general rule above propounded. When examined, however, they do but prove its truth. The one vegetates on the accumulations of the past. The other lives, by drawing on the future. The mere annuitant is forced to content himself with the lowest rate of profit, and the smallest wages. The spendthrift eats, drinks, and makes merry, but his place of final destination is the poor-house. The people of the United States live by the sale of their soil. Were the potential energies of which the earth is annually deprived, valued in accordance with the price paid to Peru for guano with which to replace a part of them, they would, probably, be found to amount to little short of half the total value given to land by all the people who have occupied it since the days of the Puritans. (See ante, vol. ii. p. 198.) Hence it is, that the proportion of movable to fixed property is so large, and that the tendency towards the ultimate re-establishment of slavery, throughout the Union, is so great.

† J. S. MILL: Principles of Political Economy, book 4, chap. iv. 2 3.

in another, they must be tempted to economy by forty; man being thus invested with power to determine for himself whether capital shall, or shall not, increase—although living, moving, and having his being, under a great law, that should render accumulation more difficult from year to year.

Why, however, was the rate of profit so high in England in the days of the Plantagenets? Why is it now so high in India, Mexico, Turkey, and all other of the non-manufacturing countries of the world? Why is it so much lower in France and England? Why is it that capital accumulates so much more rapidly in France, than in Portugal? Such are the questions to be asked of science; but they must remain unanswered by modern economists, so long as they shall persist in assuming the existence of a great law, in virtue of which the tendency to poverty and degradation increases, as men become more numerous, and more enabled to combine their efforts. The true answer to all of them, is to be found in the simple propositions that capital accumulates in the direct ratio of the economy of human effort; that, the more rapid its growth, the greater is the tendency to decline in the value of all previous accumulations; and that, the less their value, the less is the charge for their use, and the greater the tendency to increase of wealth, strength, and power.

§ 13. Mr. McCulloch tells his readers, that laborers "neither will, nor in fact can, be brought to market, unless the rate of wages be such as may suffice to bring them up, and maintain them. From whatever point of the political compass we may set out, the cost of production is," as he thinks, "the grand principle to which we must always come at last."* Men, women, and children are manufactured and "brought to market," in Ireland, to work at four-pence a day, because the peasantry of that country "live in miserable mud-cabins, without either a window or a chimney, or anything that can be called furniture; while in England the cottages of the peasantry have glass windows, and chimneys, are well furnished, and are as much distinguished for their cleanliness, and comfort, as those of the Irish for their filth and misery."+

This is, certainly, a convenient mode of accounting for the * Essay on Wages, p. 27. † Ibid, p. 32.

VOL. III.-9

wretchedness of Ireland, under the system that first annihilated their manufactures, and has since annihilated the nation, so far as regards its position in the community of nations-though scarcely very philosophical. Following out the principle here established, the cause of the large wages of the lawyer, the merchant, the general, and the admiral, must be sought for in the facts, that they live in large houses instead of "mud cottages"- there drinking wine instead of water, and wearing fine clothes instead of going in rags. A better reason for the low wages of the one, and the high wages of the other, might probably be discoverable in the fact, of both being found existing under a system which looks to cheapening labor and raw materials, for the benefit of traders in men and merchandise.

The value of man, like that of all other commodities and things, is measured by the cost of reproduction, and not by that of production. In the days of the Plantagenets, "benefit of clergy" was the privilege of the man whose knowledge of letters enabled him to read. Wealth having largely grown, almost everybody now reads the laborers of the present thus profiting by the accumulations of the past. The more rapid the growth of wealth, and the more perfect the circulation of society, the greater is the tendency towards the production of minds of higher power, with corresponding decline in the value of those which previously had been produced.

The more the prices of labor, and of the rude produce of the land, tend to rise, and the more the prices of finished products tend to fall-the two thus approximating—the smaller will be the space occupied by profits, interest, and rent, and the larger the proportions of the MAN, and of the land he cultivates.*

"We may regard the rate of interest as a sort of level, below which, all labor, all cultivation, all manufactures, and all commerce, cease. It is like a sea spread over a great country, of which the mountain summits rise above the waters-forming fertile and cultivated islands. The sea flowing out, the hill-slopes, and then the plains and valleys, gradually appear-covering themselves with products of every kind. To inundate the land and destroy the cultivation, or to restore to agriculture extensive territories, it is sufficient that the water should rise or fall a single foot. It is the abundance of capital that animates to effort; and the low rate of interest is at once the effect, and the indication of that abundance."-TURGOT: De la Distribution des Richesses, & 89.

CHAPTER XLII.

THE SAME SUBJECT CONTINUED.

II. Of the Rent of Land.

§ 1. THUS far, in our examination of the great natural laws to which man and matter are subjected, they have proved equally true, whether considered in relation to the earth itself, or to the axes, canoes, ships, or clothing, into which man converts the materials by which he is surrounded. His course, in all commumunities that increase in wealth and population, is ever onward -passing from the knife of stone to that of steel-from the skin he has torn from an animal's back to a woollen coat-from the canoe to the ship-from the Indian path to the railroad-and from the poor lands of the hills and slopes to the fertile soils of the valleys, whose occupation in the earlier day had been prevented by the moisture with which they had been saturated, and the heavy timber with which they had been covered. Wealth is power -the more the richer soils are cultivated, and the more numerous the people who can draw support from a given surface, the greater being the facility of association, and the tendency towards combination for overcoming the yet remaining resistance of nature.

Here, as everywhere, the first step is the most costly and the least productive. At each succeeding stage, less effort is demanded, while the returns to labor as steadily increase. The cost of reproducing instruments, equal in power with those in use, gradually declining, the value of the latter, too, declinesthe early land and the early axe being generally abandoned.*

Rent, too, declines-the owner of land being required to content himself with a diminished proportion of the product as

For the abandonment of the soils first cultivated in various parts of Europe, see ante, vol. i. p. 124.