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Ir is obvious that when man was first created, there existed nothing but this earth, with its various substances, their qualities and relations; and man, with his various physical, intellectual, and moral powers. The difference between the present state of man and of the universe around him, and the original state, consists in this; that the qualities and relations of things have now been discovered, and rendered available to the service of man; and the intellect of man has been cultivated, and his skill improved, so that he is able, more successfully, to avail himself of these qualities and relations. And it is also obvious, that this change in the external world has been produced by the physical and intellectual faculties of man; that is, by human industry. The whole wealth of the world has been created by the union of human industry with the materials which God had originally spread around us. Hence, all that is necessary to the creation of wealth, is capital and industry. But, it is also obvious, that the application of industry to the materials around us, that is, capital, has not been at all times either equally strenuous, or equally successful. There must, therefore, exist some rules, by which this application of industry to capital is governed, and some conditions under which it is more successfully exerted, than under others.

The subject of Production is, therefore, naturally divided into three parts. 1st. Capital. 2d. Industry. 3d. The principles by which the application of industry to capital is governed.




FIRST. The nature of Capital. The word capital is used in two senses.


When used in relation to product, it means any substance on which industry is to be exerted. that industry has been exerted, it then becomes product. Thus, leather is the capital of the shoemaker, and shoes are his product.

When used in relation to industry, however, it has a much wider signification. It then signifies the material on which industry is about to confer value, that on which it has conferred value, and the instruments which are used for the conferring of value, as well as the means of sustenance, by which the being is supported whilst he is engaged in performing the operation. The capital of an individual, if it be examined, will be found to be composed of all these. Thus, also, the capital of a nation is composed of raw material, of articles ready to be consumed, of buildings, ships, manufactories, and also of the various substances, by which human life is prolonged and rendered desirable.

SECOND. The forms of Capital. Hence it must be seen that the forms of capital must be as various as the various employments of man.

1. The Farmer possesses seed, manure, breeding animals, &c.

The Manufacturer possesses cotton, wool, flax, iron, leather, wood, and, in general, all the material on which, according to his particular calling, he desires to exert his industry.

The Merchant possesses sugar, tea, coffee, iron, &c., or the various substances to which, by transportation, he has added, or to which he intends to add, value.

2. But, in order to effect this intended creation of value, it is found that intermediate agents must, in all these cases, be employed. A farmer could not reap with his fingers, nor a miner dig with his hands, nor a manufacturer labor without tools. All these instruments, the use of which is necessary to the creation of value, are, therefore, also termed capital.

Thus, the ploughs, harrows, spades, carts, and working animals of the farmer, are a part of his capital. To the same class also, perhaps, belongs his land.

The axes, planes, hammers, of the mechanic, and the buildings and machinery of the manufacturer, are their capital.

Under this division of capital may also be included the ship of the merchant, the wagon of the teamster, and the railroad and locomotive of the proprie


3. But, besides all this, all these several persons must be fed and clothed, whilst they are exerting the industry by which value is given to these various products. Hence, under the head of Capital, must be comprehended all the various kinds of food, the clothing, and houses, which are necessary, in order to give sustenance to a human being. These are generally the same, in all kinds of industry.

4. But, besides all this, every individual, in each of these departments of human industry, will retain some portion of the product which he has created, but which he is ready to part with for something else. The farmer has grain, which he has raised; the manufacturer, cloth, which he has fabricated; the merchant, commodities, which he has imported, or bought for sale. These form another item of cap


THIRD. Of the changes which Capital undergoes. From what has been already said, it is evident, that capital derives its value from labor, and that the ef fect of labor exerted, is to produce some change in it. Hence, capital, in every industrious country,

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must be always undergoing changes; and hence, also, it frequently re-appears, in forms very different from those in which it at first existed. The form however, is of no consequence, if a superior value be the result. Political Economy, unmindful of the form, looks only at an augmentation, either of the amount, or of the degree of value.

1. The material undergoes changes.

The seed and manures of the farmer are changed into vegetables, and these again into the grain of the harvest.

The cotton and wool of the manufacturer are changed into the fabrics which he produces. The wood and nails of the carpenter are changed into houses.

The commodities of the merchant undergo changes. He exports cotton, rice, wheat, or manufactures; and imports calicoes, silks, wine, hardware, &c.

2. The instruments, or machinery, employed by these several classes of persons, undergo changes. These several instruments, in the course of production, are gradually destroyed, or consumed. The plough and cart, and animals of the farmer, the tools of the mechanic, the machinery of the manufacturer, and the ships and vehicles of the merchant, are worn cut and rendered worthless. But if they have been profitably used, they have re-appeared, in the increased value, which they have conferred upon the various objects upon which they have been employed.

3. The various kinds of food, clothing, and shelter, necessary for the existence and comfort of the human being, are also changed. They are consumed, from time to time, and their value re-appears, in that new vigor imparted to his body and mind, which forms a fresh capital, to be employed again in the work of production.

4. And lastly: The mature product of every laborer is constantly changing. As soon as he has created a product, he is anxious to dispose of it to some

one else, that he may invest its increased value in some other material which he may again, with increased advantage, unite with industry. As soon as the farmer has raised grain or fat cattle, he wishes to dispose of them, that he may invest their value again in seed, or manure, or agricultural improvements. As soon as the manufacturer has finished his fabric, he exchanges it for the means of subsistence, materials, or machinery; and so of the merchant, and of every other laborer.

We see, then, that capital is undergoing perpetual changes, and that the course of these changes is constantly from a state of less, to a state of greater value; that is, from a state more remotely adapted to the gratification of human desire, to a state less remotely adapted to it; and that so soon as it has become precisely adapted to this gratification, its change ceases, and it is consumed in some mode or other. And if it be profitably consumed it again reappears in some form adapted to create a further increase of the means of enjoyment. And hence we see, that, that country is the most prosperous which is the most rapidly accumulating, by the results of its labor, the greatest amount of these ultimate products, in proportion to its number of inhabitants. The greater the share of these products which falls. to the lot of each individual, the greater are the means of physical happiness in his possession.

FOURTH. The increase of Capital. In all these changes which we have considered, it is always to be remarked, that there is, in the very act of change, a destruction of value. He who changes iron into steel, consumes the iron, destroys that particular value and creates another in its place. He who sows wheat, destroys the value of that wheat, for food; and he who spins cotton, destroys the value of cotton wool as cotton wool. That is, neither of these substances can ever be used again for the purposes to which they were before adapted. If, however, the industry of the laborer have been skilfully directed,

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