[215-1] Boisguillebert lays the greatest weight on the harmony of the different branches of commerce. L'équilibre l'unique conservateur de l'opulence générale; this depends on there being always as many sales as purchases. The moment one link in the great chain suffers, all the others sympathise. Hence he opposes all taxation of commodities which would destroy this harmony. (Nature des Richesses, ch. 4, 5, 6; Factum de la France, ch. 4; Tr. des Grains I, 1.) Canard Principes d'E. politique, ch. 6, compares the relation between production and consumption in national economy with that between arteries and veins in the animal body. On the other hand, Sismondi, N. Principes I, 381, describes the bewilderment and want which are wont to arise when one wheel of the great politico-economical machine turns round more rapidly than the others.
[215-2] Thus, for instance, an occasional stagnation of the cotton factories of Lancashire has frequently the effect of "making all England seem like a sick man twisting and turning on his bed of pain." (L. Faucher.)
COMMERCIAL CRISES IN GENERAL.—A GENERAL GLUT.
The greater number of such crises are doubtless special; that is, it is only in some branches of trade that supply outweighs demand. Most theorists deny the possibility of a general glut, although many practitioners stubbornly maintain it.[216-1] J. B. Say relies upon the principle that in the sale of products, as contradistinguished from gifts, inheritances, etc., payment can always be made only in other products. If, therefore, in one branch there be so much supplied that the price declines; as a matter of course, the commodity wanted in exchange will command all the more, and, therefore, have a better vent. In the years 1812 and 1813, for instance, it was almost impossible to find a market for dry goods and other similar products. Merchants everywhere complained that nothing could be sold. At the same time, however, corn, meat and colonial products were very dear, and, therefore, paid a large profit to those who supplied them.[216-2] Every producer who wants to sell anything brings a demand into the market exactly corresponding to his supply. (J. Mill.) Every seller is ex vi termini also a buyer; if, therefore production is doubled, purchasing power is also doubled. (J. S. Mill.) Supply and demand are in the last analysis, really, only two different sides of one and the same transaction. And as long as we see men badly fed, badly clothed, etc., so long, strictly speaking, shall we be scarcely able to say that too much food or too much clothing has been produced.[216-3]
[216-1] When those engaged in industrial pursuits speak of a lasting and ever-growing over-production, they have generally no other reason for their complaints than the declining of the rate of interest and of the undertaker's profit which always accompany an advance in civilization. Compare J. S. Mill, Principles, III, ch. 14, 4. However, the same author, I, 403, admits the possibility of something similar to a general over-production.
[216-2] Say's celebrated Théorie des Débouchés, called by McCulloch his chief merit, Traité, I, ch. 15. At about the same time the same theory was developed by J. Mill, Commerce defended, 1808. Ricardo's express adhesion, Principles, ch. 21. Important germs of the theory may be traced much farther back: Mélon, Essai politique sur le Commerce, 1734, ch. 2; Tucker, On the Naturalization Bill, 13; Sketch of the Advance and Decline of Nations, 1795, 182.
[216-3] Precisely the same commercial crisis, that of 1817 seq., which more than anything else led Sismondi to the conclusion that too much had been produced in all branches of trade, may most readily be reduced to Say's theory.
There was then a complaint, not only in Europe but also in America, Hindoostan, South Africa and Australia, of the unsaleableness of goods, overfull stores, etc.; but this, when more closely examined, was found to be true only of manufactured articles and raw material, of clothing and objects of luxury; while the coarser means of subsistence found an excellent market, and were sold even at the highest prices. Hence, in this case, there was by no means any such thing as over-production. The trouble was that in the cultivation of corn and other similar products, too little was produced. There was a bad harvest even in 1816.
The most important authorities in favor of the possibility of a general glut are Sismondi, N. Principes, IV, ch. 4, and in the Revue encyclopédique, Mai, 1824: Sur la Balance des Consommations avec les Productions. Opposed by Say in the same periodical (Juilliet, 1824); where the controversy was afterwards reopened in June and July, 1827, by Sismondi and Dunoyer. Compare Etudes, vol. I; Ganilh, Théorie, II, 348 ff.; Malthus, Principles, II, ch. 1, 8. Compare Rau, Malthus and Say, über die Ursachen der jetzigen Handelsstockung, 1821. Malthus' views were surpassed by Chalmers, On Political Economy in Connexion with the moral State of Society, 1832. But even Malthus himself in his Definitions, ch. 10, No. 55, later, so defined a "general glut" that there could be no longer question of his holding to its universality. For an impartial criticism, see especially Hermann, Staatsw. Untersuchungen, 251, and M. Chevalier, Cours, 1, Leçon, 3.