By following the direction which capital gave to his industry, the prodigal, whose course we have traced up to the point when he went into the condition of a labourer, became at length a capitalist. "He had gained, after a considerable time, money enough to purchase, in order to sell again, a few cattle, of which he had taken pains to understand the value. He speedily, but cautiously, turned his first gains into second advantages; retained, without a single deviation, his extreme parsimony; and thus advanced by degrees into larger transactions and incipient wealth. The final result was that he more than recovered his lost possessions, and died an inveterate miser, worth 60,000l."
He gained "money," and he "purchased" cattle. In the simple transaction which has been recorded of the first exchange of the prodigal's labour for capital, we find the circumstances which represent every exchange of labour for capital. The prodigal wanted meat and drink, and he gave labour in exchange for meat and drink; the capitalist wanted the produce of labour—he wanted a new value bestowed upon his coals by labour—and he gave meat and drink in exchange for the labour which the prodigal had to give. But the prodigal wanted something beyond the meat and drink which was necessary for the supply of the day. He had other immediate necessities beyond food; and he had determined to accumulate capital. He therefore required "a few pence" in addition to the "meat and drink." The capitalist held that the labour performed had conferred a value upon his property, which would be fairly exchanged for the pence in addition to the food, and he gave, therefore, in exchange, that portion of his capital which was represented by the money and by the food. This blending of one sort of consumable commodity, and of the money which represented any other consumable commodity which the money could be exchanged with, was an accident arising out of the peculiar circumstances in which the prodigal happened to be placed. In ordinary cases he would have received the money alone,—that is, he would have received a larger sum of money to enable him to exchange for meat and drink, instead of receiving them in direct payment. It is clear, therefore, that as the money represented one portion of the consumable commodities which were ready to pay for the labour employed in giving a new value to the coals, it might represent another portion—the meat, for instance, without the drink; or it might represent all the consumable commodities, meat, drink, lodging, clothes, fuel, which that particular labourer might want; and even represent the accumulation which he might extract out of his self-denial as to the amount of meat, drink, lodging, clothes, and fuel which he might require as a consumer; and the farthing saved out of his money-payment might be the nest-egg which was to produce the increase out of which he purchased cattle, and died a rich miser.
We may be excused for calling attention to the fact, which is a very obvious one, that if the labourer, whose story we have told, had received a portion of the coals upon which he had conferred a new value in exchange for the labour which produced that value, he would have been paid in a way very unfavourable for production. It would have required a new labour before the coals could have procured him the meat, and drink, and lodging of which he had an instant want; and he therefore must have received a larger portion of coals to compensate for his new labour, or otherwise his labour must have been worse paid. There would have been unprofitable labour, whose loss must have fallen somewhere,—either upon the capitalist or the labourer in the first instance, but upon both ultimately, because there would have been less production. All the unprofitable labour employed in bringing the exchange of the first labour for capital to maturity would have been so much power withdrawn from the efficiency of the next labour to be performed; and therefore production would have been impeded to the extent of that unprofitable labour. The same thing would have happened if, advancing a step forward in the science of exchange, the labourer had received an entire payment in meat and drink, instead of a portion of the coals, which he could have exchanged for meat and drink. Wanting lodging, he would have had to seek a person who wanted meat and drink in exchange for lodging, before he could have obtained lodging. But he had a few pence,—he had money. He had a commodity to exchange that he might divide and subdivide as long as he pleased, whilst he was carrying on an exchange,—that is, he might obtain as much lodging as he required for an equivalent portion of his money. If he kept his money, it would not injure by keeping as the food would. He might carry it from place to place more easily than he could carry the food. He would have a commodity to exchange, whose value could not be made matter of dispute, as the value of meat and drink would unquestionably have been. This commodity would represent the same value, with little variation, whether he kept it a day, or a week, or a month, or a year; and therefore would be the only commodity whose retention would advance his design of accumulating capital with certainty and steadiness. It is evident that a commodity possessing all these advantages must have some intrinsic qualities which all exchangers would recognise—that it must be a standard of value—at once a commodity possessing real value, and a measure of all other values. This commodity exists in all commercial or exchanging nations in the shape of coined metal. The metal itself possesses a real value, which represents the labour employed in producing it; and, in the shape of coin, represents also a measure of other value, because the value of the coin has been determined by the sanction of some authority which all admit. That authority is most conveniently expressed by a Government, as the representative of the aggregate power of society. The metal itself, unless in the shape of coined money, would not represent a definite value; because the metal might be depreciated in value by the admixture of baser or inferior metals, unless it bore the impress of authority to determine its value. The exchangers of the metal for other articles of utility could not, without great loss of labour, be constantly employed in reducing it to the test of value, even if they had the knowledge requisite for so ascertaining its value. It used to cost 1000l. a year to the Bank of England for the wages of those who weighed the gold coin brought to the Bank; and it has been estimated that 30,000 sovereigns pass over the Bank counter daily. A machine is now used at the Bank, which separates the full-weight sovereigns and the light ones, at the rate of 10,000 an hour. In Greece a piece of gold in the rude times was stamped with the figure of an ox, to indicate that it would exchange for an ox. In modern England, a piece of gold, called a sovereign, represents a certain weight in gold uncoined, and the Government stamp indicates its purity; whilst the perpetual separation of the light sovereigns from those of full-weight affords a security that very few light ones are in general circulation. A sovereign purchases so many pounds weight of an ox, and a whole ox purchases so many sovereigns. The great use of the coined metal is to save labour in exchanging the ox for other commodities. The money purchases the ox, and a portion of the ox again purchases some other commodity, such as a loaf of bread from the baker, who obtains a portion of the ox through the medium of the money, which is a standard of value between the bread and the beef. Our great poetical satirist, Pope, in conducting his invective against the private avarice and political corruption of his day, imagines a state of things in which, money and credit being abolished, ministers would bribe and be bribed in kind. It is a true picture of what would be universal, if the exchanges of men resolved themselves into barter:
"A statesman's slumbers how this speech would spoil! 'Sir, Spain has sent a thousand jars of oil; Huge bales of British cloth blockade the door; A hundred oxen at your levee roar.'"
CHAPTER VI.
Importance of capital to the profitable employment of labour—Contrast between the prodigal and the prudent man: the Dukes of Buckingham and Bridgewater—Making good for trade—Unprofitable consumption—War against capital in the middle ages—Evils of corporate privileges—Condition of the people under Henry VIII.
If we have succeeded in making our meaning clear, by stating a general truth, not in an abstract form, but as brought out by various instances of the modes in which it is exhibited, we shall have led the reader to the conclusion that accumulation, or capital, is absolutely essential to the profitable employment of labour; and that the greater the accumulation the greater the extent of that profitable employment. This truth, however, has been denied altogether by some speculative writers;—and, what is more important, has been practically denied by the conduct of nations and individuals in the earlier state of society,—and is still denied by existing prejudices, derived from the current maxims of former days of ignorance and half-knowledge. With the speculative writers we have little to do. When Rousseau, for instance, advises governments not to secure property to its possessors, but to deprive them of all means of accumulating, it is sufficient to know that the same writer advocated the savage state, in which there should be no property, in preference to the social, which is founded on appropriation. Knowing this, and being convinced that the savage state, even with imperfect appropriation, is one of extreme wretchedness, we may safely leave such opinions to work their own cure. For it is not likely that any individual, however disposed to think that accumulation is an evil, would desire, by destroying accumulation, to pass into the condition, described by John Tanner, of a constant encounter with hunger in its most terrific forms: and [seeing], therefore, the fallacy of such an opinion, he will also see that, if he partially destroys accumulation, he equally impedes production, and equally destroys his share in the productive power of capital and labour working together for a common good in the social state.
But, without going the length of wishing to destroy capital, there are many who think that accumulation is a positive evil, and that consumption is a positive benefit; and, therefore, that economy is an evil, and waste a benefit. The course of a prodigal man is by many still viewed with considerable admiration. He sits up all night in frantic riot—he consumes whatever can stimulate his satiated appetite—he is waited upon by a crowd of unproductive and equally riotous retainers—he breaks and destroys everything around him with an unsparing hand—he rides his horses to death in the most extravagant attempts to wrestle with time and space; and when he has spent all his substance in these excesses, and dies an outcast and a beggar, he is said to have been a hearty fellow, and to have "made good for trade." When, on the contrary, a man of fortune economizes his revenue—lives like a virtuous and reasonable being, whose first duty is the cultivation of his understanding—eats and drinks with regard to his health—keeps no more retainers than are sufficient for his proper comfort and decency—breaks and destroys nothing—has respect to the inferior animals, as well from motives of prudence as of mercy—and dies without a mortgage on his lands; he is said to have been a stingy fellow who did not know how to "circulate his money." To "circulate money," to "make good for trade," in the once common meaning of the terms, is for one to consume unprofitably what, if economized, would have stimulated production in a way that would have enabled hundreds, instead of one, to consume profitably. Let us offer two historical examples of these two opposite modes of making good for trade, and circulating money. The Duke of Buckingham, "having been possessed of about 50,000l. a year, died in 1687, in a remote inn in Yorkshire, reduced to the utmost misery."[12] After a life of the most wanton riot, which exhausted all his princely resources, he was left at the last hour, under circumstances which are well described in the following lines by Pope:—