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fixed capital, which involves, in its creation, a greater amount of expense.

It is thus that a society, age after age, grows rich, and each successive race of men leaves the world better provided with the means of production, than it found it.

This may all be illustrated, by a few very familiar instances. A savage, who obtains peltry by his bow and arrows, having provided for the food and clothing of his family, will, if he be industrious, possess a surplus which must now be useless to him. He would naturally exchange his surplus for a rifle; a kind of fixed capital, by means of which, his circulating capital would be greatly increased. This increase of capital would enable him, besides procuring better clothes and more numerous conveniences, to add to his fixed capital by purchasing a horse, or a plough, or by erecting a house. These, in their turn, would augment his circulating capital; and thus, with every year, his fixed and circulating capital would steadily increase. Hence, very soon, there would arise a demand for the services of men who employed themselves

in creating fixed, instead of circulating capital. That is, mechanical arts would be practised; and the artisans would be, as we find that in such a state of society they always are, exorbitantly paid for their labor.

Again: Suppose a farmer to enter upon new and untilled land. His first care is to produce the necessities of life, for himself and his family. When this is accomplished, he appropriates a part of his labor to the creation of fixed, instead of annual capital: that is, he erects fences, purchases with his produce, carts and animals, builds barns and outhouses, and thus renders his farm a much more productive instrument than before. With his increasing surplus, he purchases additional land, if he needs it, andbrings it all into such a state of cultivation as he thinks desirable. By all these means, his annual surplus is rendered greater, and he is enabled to extend the amount of his fixed capital, by building a better house, pur

chasing better ploughs, harrows, carts, and various machines by which his future labor will be rendered more productive. But we see that this could not be done by the farmers of a neighborhood, unless some portion of them abandoned farming, and devoted themselves to the creation of fixed capital. There would, therefore, arise a great demand for mechanical labor. And as there would hence arise the necessity for a great number of exchanges, some portion of the society must devote themselves to effecting them; that is, must become merchants. In this manner, circulating capital first gives rise to fixed capital, and fixed capital increases again the amount of circulating capital; and thus they go on, year after year, mutually augmenting each other.

Thus, also, the merchant, whose business it is to augment the exchangeable value of a given amount of circulating capital by transportation and exchange, produces, by his operations, an annual surplus. This he adds to his former capital, for a while, but soon purchases fixed capital, such as ships, &c., to facilitate his operations. When he has enough of these, and as large an amount of circulating capital as he wishes to employ, he then begins to invest his surplus either in some permanent works of public improvement, as bridges, roads, canals, or in something which, besides facilitating the productiveness of the society, will also yield him a revenue, or else he employs it in manufactures, according to the condition of the country, and its natural demands and facilities.

From what has been remarked above, we may easily see the natural course which a nation takes, in the progressive accumulation of wealth. Its first productions are, circulating, or annual capital; the products of the field, of the forest, or of the ocean. Next follow improvement in permanent conve niences, and the construction of instruments for agricultural production; then the exchange of its own products for other circulating capital, or for the annual necessaries of life; and then the exchange for fixed capital of the most necessary kind. Thus, the Dutch, on their first settlement in this country, used to import their bricks from Holland. Commerce being thus commenced with an older country the colonists soon engage in it themselves, and invest a large portion of their annual surplus in ships. Before manufactures had commenced in this country, previously to the Revolution, the commerce of the colonies had become already extensive. All these changes prepare the way for the investment of capital in manufactures, which, in their proper and natural time, must be established; and when that time arrives, they will be established, without the aid of legislative enactment, and according to the very laws by which accumulation is governed.

From what has been remarked, we also see that the advantages which we enjoy over savage nations result, principally, from the possession of a greater amount of fixed capital; or, in other words, the permanent results of pre-exerted industry. That advantage consists in this, that this capital, besides affording to its owners the ordinary rate of profit, enables men to produce at a much cheaper rate; that is, at a less expense of labor. Thus, a cotton factory, besides affording a fair profit to the owner, enables him to do, by one hour's labor, what would otherwise require the labor of days or of weeks. By all this difference, therefore, we have the advantage over savages, or over those who went before us. Hence, a nation, which does not possess the results of pre-exerted industry, must be poor, unless its natural advantages enable it to avail itself of those of other countries. *

* Or, in other words, as it is well expressed by Mr. Carey, in his late work on this subject; the quality as well as the quantity of Jabor, enters into the account, whenever we speak of the exchangeable value of the products which it has created. The quality of labor is always in proportion to the amount of pre-exerted industry with which it operates.

Hence, we also see the reason why the traffic between savage and civilized nations is so greatly in favor of the latter . The latter are enabled to offer in barter that which is of inestimable value to the savage, but which the civilized man can produce with a very small portion of labor. An axe would cost a savage the labor of weeks or of months, while a smith in New England would make it in a few hours. Hence, it is not wonderful that the one should be willing to give for it vastly more than it costs the other. And, on the other hand, the commodities of the savage are of very little value to him, but of high value to the mechanic or artisan. Hence, the gain to him also is great. An Indian who exchanges peltry, which is worth in New York fifty or one hundred dollars, for a rifle, powder and bullets, has improved his condition, by means of the purchase, really more than the gunsmith, who has made so exorbitant a profit.

SEVENTH. Of Money. It will be observed that, thus far, I have not mentioned money as an item of capital. Although this is not the place in which to treat of the functions of money, yet it may be proper here to add a single remark concerning it.

Money forms but a very small part of the capital of any country. Every one may easily judge of this, from his own observation. How very small a portion of any one's possessions is in money. And if this be true of every individual separately, it must be true of all the individuals collectively.

The sole use of money, is to facilitate exchanges. It is an instrument for the saving of labor, and for the performing of labor with greater accuracy. Of this, any one may convince himself in a moment, if he will imagine two cases, in the one of which he was obliged to make several exchanges without money, and the other in which he could make them with it.

Money gains nothing by exchange, but rather loses in value, like every other machinery which is worn out while it accomplishes its object. Hence, it be longs to the class of fixed capital. It is subject to slow

wear, which must be replaced out of the circulating capital of the country.

And, hence, as any country may have a greater amount of any particular kind of fixed capital than it needs, as, for instance, of any particular kind of machinery; and as, when this is the case, it sends it abroad, or in other words, makes it an article of export, or changes it into circulating capital, so is it with money. If a country has more money than is sufficient to accomplish its exchanges, it sends it abroad, and receives back something that it needs more. Such is, permanently, the case in mining countries; and such is, at times, the condition of almost every commercial nation.

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