vide a general medium of exchange, the whole transaction must be conducted by barter; thus, if the individual possessing the wheat required a coat, he would have to discover some one who was willing to exchange the coat he wanted for wheat. Every transaction would under these circumstances be conducted by barter. Commerce thus impeded could never develope, and society never advance beyond its primitive rudeness. But these important functions which money performs, engendered in men's minds the fallacies of the mercantile system. For the value of every commodity being estimated in money, and every commodity also when bought or sold being exchanged for money, men soon began to mistake the symbol for the reality, and nothing was regarded as wealth except money. A nation consequently tested the utility of its commercial transactions with other nations, by ascertaining whether the commerce caused money to flow into the country. The whole commercial policy of a nation was framed with a specific object of encouraging the greatest possible accumulation of the precious metals. No one would now profess adherence to the errors of the mercantile system, but we shall have abundant opportunities of showing that they are still the secret prompters of many a wide-spread fallacy. The consequences of the mercantile system will be further discussed in those chapters which treat of money. These general remarks upon wealth will enable us at once to proceed to the consideration of the production of wealth, the first great division of political economy. BOOK I. CH. I. BOOK I. tion. THE CHAPTER II. THE REQUISITES OF PRODUCTION. HE production of every species of wealth requires the application of man's labour. The forces of nature, Requisites acting upon the materials of which the earth is composed, of produc- have created products from which wealth is immediately derived. The seams of coal were deposited without any human agency; but the coal is not available to satisfy any of the wants of life until man's labour has dug this coal from the mine, and placed it in those situations in which it is required. But labour, in order to produce anything, must have some materials upon which to work. These are supplied by nature, and may be termed natural agents. The steam-engine, for example, is fashioned out of metals, deposited as the result of certain forces acting in remote geological ages. Labour, natural agents, Production, therefore, has manifestly two requisiteslabour, and appropriate natural agents upon which this labour may work. But there is a third requisite, the necessity of which will, perhaps, not appear so self-evident. The casual observer might be very possibly satisfied to accept as sufficient the two requisites of production we have mentioned; for it might be said, Does not properly trained labour, acting upon suitable materials, suffice to produce the required commodity? But there is something which is requisite to this labour itself. The labourer must be fed. How can he be fed but by food which has been viously accumulated? This food also required the application of labour; therefore, since the labourer must be fed by previously accumulated food, a third requisite of production is suggested, for some of the results of past labour are required to be set aside to sustain the labourer whilst pre BOOK I. CH. II. labouring. The third requisite of production, therefore, is a fund reserved from consumption, and devoted to sustain those engaged in future production. This fund is and capitermed capital. The early steps of a student in almost every science are met by certain obstacles; if he succeeds in surmounting these obstacles, his future progress seems to be insured. The young mathematician who obtains a firm grasp of the physical conceptions involved in the laws of motion, will comprehend with facility problems of apparently great mathematical complexity. The questions involved in considering the functions of capital, will test a man's capacity to master the principles of political economy. Success in the study of this science may be regarded as guaranteed to all who obtain a clear insight into the nature of capital. There are certain fundamental propositions concerning capital which should be kept steadily and constantly in view. One of these is as follows:Capital is the result of saving. This saving may not be primarily prompted with a view of assisting future production. The results of labour, however, are not rendered immediately available for consumption: the ploughman who ploughs the soil must wait for months before the wheat which his labour contributes to produce, will be ready for human food; but the ploughman must be fed, and he is fed with food previously accumulated. The labourers, too, who have constructed his plough, must be fed on food which has been saved from previous consumption; for a considerable time must elapse before the harvest can be gathered from the soil which the plough has assisted in tilling. Capital, therefore, represents all that has been set aside. from the results of past labour to assist present or future production. It will now be perceived that capital is as indispensable a requisite of production as either labour or appropriate natural agents. tal. Capital is the result of saving. CHAPTER III. LABOUR AS AN AGENT OF PRODUCTION. BOOK I. CH. III. volves the IT T is manifest, from the remarks which have been made in the previous chapter, that labour is indispensable Wealth in to the production of wealth. As we proceed to describe the purposes to which labour is directed, it will be found, as observed by Mr Mill, that labour creates utilities fixed and embodied in material objects. Nature supplies the materials, but labour fashions these materials, arranges them, places them in those situations in which they are required, and in fact renders them in every respect suited to satisfy the wants of life. application of labour cated pro cesses. The greater number of commodities, before they become in compli- serviceable for man, pass through many complicated processes, each of which necessitates much complex labour. Trace the cotton seed, first sown in the swamps of Georgia, then supplying material to the looms of Manchester. Watch the woven cloth transported to the far East, there destined to clothe the inhabitants of some remote valley of Scinde. Attempt such an examination, and we at once become almost overwhelmed with the endless series of labourers who have ministered to the production of so simple a commodity as a piece of cotton cloth. There are those who cultivate the cotton plant in Georgia, and prepare it for exportation. The cotton has to be brought to the port. Shipwrights must have constructed the ships which carry the cotton from America to England; sailors must navigate these ships; dock-labourers are required to unload the cotton; the railway on which the cotton is carried from Liverpool to Manchester has been constructed by the industry of numerous classes of labourers; and the cotton, before it is woven into cloth, passes through the hands of a succession of workmen whose skill is assisted by machinery-to the creation of which almost every class of labourers has contributed, from the collier to the skilled and thinking mechanician. Every one may also be regarded as an important participator in the work, who has, by his saving, contributed to the accumulation of the capital by which the industry of the labourers has to be sustained. We are quickly carried into endless ramifications if we attempt to ascertain the labour which has, either directly or indirectly, assisted in the production of an apparently simple commodity. BOOK I. CH. III. and un Although no wealth whatever can be produced without Productive labour, yet there is much labour which does not contribute productive to the creation of wealth. Hence, labour is divided into labour. two great classes, productive and unproductive labour. This is a distinction which, in name, is familiar to those who have not studied political economy. Before the characteristics which distinguish productive Functions from unproductive labour are explained, it will be neces- of labour sary to revert to our primary conception of wealth. Nature, as has been before remarked, supplies the materials. Man is powerless to create any material object; he combines substances together which would never be combined without his interposition, and thus creates a product which nature could never construct without his aid. Man takes the wheat and puts it in that situation where it will be ground; with the flour he mixes a certain quantity of water and yeast, and when he has brought the mixture within the influence of the requisite heat, a loaf of bread will have been made. It is through the agency of man's labour that these utilities are embodied in material objects which give them their exchange value. instance, the utility which man confers upon coal is to place it in those situations in which it may be required. There can be no doubt, therefore, that all that labour is productive which confers utility upon material objects. For Such is the labour of all ordinary workmen. Agricultural labourers, manufacturing operatives, bricklayers, &c., must all be manifestly ranked as productive labourers. All those, too, who are employed in transporting merchandise from one place to another, are productive labourers, for they confer upon commodities the utility of being in confer ring utility directly, |