This is another difference between national resources or world resources and private resources. The resources of a private person, which are only a link in the whole chain of trade, and which are, therefore, estimated at the value in exchange of their component parts should, indeed, always be increased by savings made. (§ 8.) For even the most excessive increase of supply in general, which largely lowers the price of a whole class of commodities, will never reduce the price of individual quantities of that commodity below zero, and scarcely to zero. It is quite otherwise in the case of national or world resources which must be estimated according to the value in use of their component parts. Every utility supposes a want. Where, therefore, the want of a commodity has not increased, and notwithstanding there is a continuing increase in the supply, the only result must be a corresponding decrease in the utility of each individual part.[221-2]
If a people were to save all that remained to them over and above their most urgent necessities, they would soon be obliged to seek a wider market in foreign countries, or loan their capital there; but they would make no advance whatever in higher culture nor add anything to the gladness of life.[221-3] On the other hand, if they would not save at all, they would be able to extend their enjoyments only at the expense of their capital and of their future. Yet these two extremes find their correctives in themselves. In the former case, a glut of the market would soon produce an increased consumption and a diminished production; in the latter the reverse. The ideal of progress demands that the increased outlay with increased production should be made only for worthy objects, and chiefly by the rich, while the middle and lower classes should continue to make savings and thus contribute to wipe out differences of fortune.[221-4]
[221-1] Up to this point, indeed, wants increase with the means of their satisfaction. The man who has two shirts always strives to get a dozen, while the person who has none at all, very frequently does not care for even one. And so the person who has silver spoons generally desires also to possess silver candle-sticks and silver plates. On Lucullus' 5,000 chlamydes, see Horat., Epist., I, 6, 40 ff.
[221-2] That consumption and saving are not two opposites which exclude each other is one of Adam Smith's most beautiful discoveries. See Wealth of Nat., II, ch. 3. But compare Pinto, Du Crédit et de la Circulation, 1771, 335. Before his time most writers who were convinced of the necessity of consumption were apologists of extravagance. Thus v. Schröder, F. Schatz- und Rentkammer, 23 seq. 47, 172. Louis XIV.'s saying: "A King gives alms when he makes great outlays." According to Montesquieu, Esprit des Louis[TN 48] VII., 4, the poor die of hunger when the rich curtail their expenses. This view, which must have found great favor among the imitators of Louis XIV. and Louis XV. was entertained to some extent by the Physiocrates; for instance, Quesnay, Maximes générales, 21 seq. Compare Turgot, Œuvres, éd, Dare, 424 ff. On the other hand, Adam Smith, loc. cit. says that the spendthrift is a public enemy, and the person who saves a public benefactor. Lauderdale, Inquiry, 219, reacts so forcibly against the one-sidedness which this involves that he believes no circumstance possible "which could so far change the nature of things as to turn parsimony into a means of increasing wealth." In his polemic against Pitts' sinking fund as inopportune and excessive, he assumes that all sums saved in that way are completely withdrawn from the national demand. See per contra Hufeland n. Grundlegung I, 32, 238. Sismondi, N. P. II, ch. 6, with his distinction between production and revenu, is more moderate; the former is converted into the latter only in as much as it is "realized," that is, finds a consumer who desires it, and pays for it. Now only can the producer rely on anything; can he restore his productive capital, estimate his profit, and use it in consumption, and lastly begin the whole business over again.... A stationary country must remain stationary in everything. It cannot increase its capital and widen its market while its aggregate want remains unaltered. (IV, ch. 1.)
[221-3] Thus John Stuart Mill thinks that the American people derive from all their progress and all their favorable circumstances only this advantage: "that the life of the whole of one sex is devoted to dollar-hunting, and of the other to breeding dollar-hunters." (IV, ch. 6, 2.) In the popular edition of 1865, after the experience of the American civil war, he materially modified this judgment.
[221-4] Storch, Nationaleinkommen, 125 ff. That there is at least not too much to be feared from the making of too great savings is shown by Hermann, St. Untersuch., 371 seq. On the other hand, there is less wealth destroyed by spendthrifts than is generally supposed, for spendthrifts are most frequently cheated by men who make savings themselves. (J. S. Mill, Principles, I, ch. 5, 5.)
SPENDTHRIFT NATIONS.
As there are extravagant and frugal individuals, so also are there extravagant and frugal nations. Thus, for instance, we must ascribe great national frugality to the Swiss. In many well-to-do families in that country, it is a principle acted upon to require the daughters to look to the results of their white sewing, instead of giving them pin-money; to gather up the crumbs after coffee parties in the presence of the guests, and to make soup of them afterwards, etc. Sons are generally neither supported nor helped to any great extent by their parents in their lifetime, and are required to found their own homes. They, therefore, grow rich from inheritance only late in years, when they are accustomed to a retired and modest mode of life, and have little desire, from mere convenience sake, to change it for another. And so Temple informs us that it never occurs to the Dutch that their outlay should equal their income; and when this is the case they consider that they have spent the year in vain. Such a mode of life would cost a man his reputation there as much as vicious excess does in other countries. The greatest order and the most accurate calculation of all outlay in advance is found in union with this; so that Temple assures us he never heard of a public or private building which was not finished at the time stipulated for in advance.[222-1]
On the other hand, the Englishman lives rather luxuriantly. He is so used to enjoying comparative abundance, that when English travelers see the peasantry of the continent living in great frugality, they generally attribute it to poverty and not to their disposition to make savings. If England has grown rich, it is because of the colossal magnitude of its production, which is still more luxuriant and abundant than its consumption.[222-2] This contrast may be the effect in part of nationality and climate;[222-3] but it is certainly the effect in part also of a difference in the stage of civilization which these countries have respectively reached. The elder Cato had a maxim that a widow might, indeed, allow her fortune to diminish, but that it was a man's duty to leave more behind him than he had inherited.[222-4] And how prodigally did not the lords of the universe live in later times!