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ery one will know that, by waiting, he can be provided with it at a reasonable price. Thus, a small rise of price in a manufactured article, when the material is abundant, will cause the quantity produced to be greatly increased; hence, the rise is never excessive. But when a long time is necessary for the production of an article, and it is an article of prime necessity, the rise of price is frequently great.

And again: It will be seen, that, so far as the seller and the buyer are concerned, these variations balance each other. When products rise on the merchant's hands, he charges an additional price: when they fall, he is obliged, frequently, to sell at a reduced profit, or even to sell below cost. The gain, in one case, makes up for the loss in the other. Hence, as no one sympathizes with the merchant, when he sells at a loss, no one should complain, when he sells, for a short time, at more than an ordinary gain.

If, now, we sum up what has been said, we shall come to the following general conclusions:

1. Cost; that is, labor bestowed; is the foundation of exchangeable value, and from this, it can never, for long periods, materially vary: that is, an article can always be had for what it costs to produce it; including in this, the ordinary profit to the producer. Notwithstanding this, there will, however, arise various fluctuations, depending upon the following circumstances:

Other things, then, being equal2. The greater the supply, the less the exchangeable value.

3. The less the supply, the greater the exchangeable value.

4. The greater the demand, the greater the exchangeable value.

5. The less the demand, the less the exchangeable value.

6. And, in general, cost being fixed, exchangeable value is inversely as the supply, and directly as the demand.

7. Or, still more generally, at any particular time, exchangeable value will be as the cost, plus the effect produced by the variation in supply and demand.

Hence, wealth consists of all objects which have an exchangeable value.

Exchangeable value is slightly distinguishable from price. The first, is the power which any object possesses of procuring for us any object whatever. The second, price, is the power that it has to procure for us one particular object; that is, money.

Of Production. From what has been said, it is easy to explain the nature of Production. It is the act by which we confer à particular value upon any object whatever, or by which we give to any object its adaptedness to gratify desire. We can neither create nor annihilate any thing. All that we can do, is, to modify what already exists. When we so modify any thing, that it is capable of gratifying a desire which before it was not capable of gratifying, our so doing is called production.

The modifications which objects need, in order to render them capable of gratifying desire, are various. Sometimes the elements of the substance, sometimes its form, and sometimes its place, require to be changed. Whenever human industry accomplishes any of these results, it is called production ; the person who exerts this agency is called a producer; and the substance itself, on which this agency is exerted, is called a product.

In some cases, we find the substance, as, for instance, ore in the mine, or stone in the quarry, in its natural state; in others, we receive it from those who have imparted to it one value, and we add to it another. The material which, in either case, we obtain for the purpose of combining it with our own industry, and forming it into a product, is called capital; and, after the labor has been exerted, and the value created, it is called a product. Thus, the same article may be product to one, and capital to another. Leather is the product of the currier, and the capital of the shoemaker.

The term capital is not merely applied to the material on which industry is to be exerted, but also to all the instruments by which human industry is assisted; as well as to whatever is necessary to the support of that industry.

Of Exchange. I have said, above, that the mode of every man's industry is decided by his individual tastes and circumstances. It is commonly, however, confined to the creation of one kind of product, inasmuch as it is thus vastly more available. His desires, on the other hand, are as innumerable as the objects created to gratify them. He creates but one value and he wants a thousand. Hence, he can be gratified by means of no less an nine hundred and ninety-nine exchanges. He thus parts with various portions of the value which he has created, for the sake of obtaining the values which others have created. Hence the necessity of universal and ceaseless exchange. Hence also the reason why so large a portion of mankind devote themselves to the business of eflecting exchanges. Those who do so, are called merchants. Those who are employed in the transportation of wares or merchandise by sea or by land, are all engaged in effecting the same object.

Distribution. In even the very first stages of society, it is found that the productive result of human power is greatly increased by union of effort and division of labor. Ten men, laboring together, can accomplish much more than ten men laboring separately. Specially is this the case where the various parts of a process are divided, and each one performs that part for which he is best adapted. And, as capital accumulates, it is commonly the case, that one who owns the capital, unites in production with another or others, who perform the labor. When the product is realized, and the gains are to be divided, some equitable law is to be adopted, in the distribution. Different laborers are entitled to different wages: and there are just proportions to be observed between the wages of labor and the wages of capital. The principles of this adjustment are treated of, by Political Economists, under the head of Distribution.

Consumption. Suppose, now, the value be created, and brought within the reach of him who desires it; he uses it, and, in the very act of use, its value is destroyed. We exchange labor, or money, or wheat, for fuel; we use the fuel in our fire places, and its value is destroyed. We purchase bread; we eat it, and its value ceases forever. A baker purchases flour: and makes it into bread; the flour ceases to be flour: its value, in this respect, is gone forever. This act, by which we annihilate any particular value, is called consumption. It is exactly the opposite to production. Sometimes the utility is destroyed, with no other result than merely the gratification of desire. Such is the case with fire-works, shows, and amusements of almost every sort. At other times, the value or utility is destroyed; but it re-appears, in another and much more valuable form. Thus, a side of sole leather is cut up into soles, for shoes: its value, as a side of sole leather, is destroyed forever; but its value re-appears, in another form, and with an increased exchangeable value. The food which we eat, disappears; but its value re-appears, in re-animated health and vigor, by which we are prepared for subsequent labor. The former is termed unproductive, the latter, productive consumption.

The whole subject of Political Economy, may be therefore divided into four parts.

The First Part treats of PRODUCTION, or the laws which govern the application of labor to capital in the creation of value.

The Second, or EXCHANGE, treats of the principles which govern men, when they wish, by means of their own labor, to avail themselves of the labor of others.

The Third, or DISTRIBUTION, treats of the laws by

which those who have united in the creation of a product, receive, respectively, their portion of the result.

The Fourth, or CONSUMPTION, treats of the laws which should govern us in the destruction of value.

Each of these subjects will be treated of, in the above order, in the following work.

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