made, in 1696, to issue notes on the security of land. It was a failure, fortunately at an early stage in its proceedings. In France, in 1718, Law attempted to circulate paper on the security of stocks. The plan broke down, and induced widespread ruin. In France again, at the Revolution, an attempt was made to issue paper on the security of the public lands. But the government found out very soon, that a security which is of first class character for the purpose of a mortgage, is wholly worthless as a basis for a currency. Similar though far less serious consequences ensued from the fact, that during the greater part of the continental war this country had an inconvertible paper currency, that is, bank-notes which the holder could not at his pleasure turn into gold at the counter of the bank which issued them, though these notes were based on gold. Just the same results would ensue if an attempt were made to found a paper currency on the public funds. In short, what the holder of a note requires is that he shall be able to change this into-not public securities, or land, or goods, or anything of the kind, but simply into-gold or silver. The power of converting goods into cash diminishes as the amount of available cash diminishes, but in a progressively greater degree. The rule applies still more strongly to the conversion of public securities into cash, because these represent, not goods, but the future earnings of the community.

We now see why it is that persons will take pieces of paper (which have absolutely no economical value, since the pieces have no appreciable worth, and can be produced at discretion, at no appreciable cost) in lieu of these costly products, gold and silver. We can also see under what circumstances they will not take them at all.

Between these two extremes of complete confidence and entire distrust, there are many degrees. But that which determines the value at any one time of a paper currency which does not command complete confidence, is the answer which the person who holds it can give to the question; at what time, and in what degree of fulness will the persons who issue this paper redeem the pledge which the paper represents? It is plain that the power of answering the question is far more in the hands of astute men of business whose attention is constantly directed to these things, and whose acuteness is aided by experience, than it is in the hands of the general public. A discredited paper currency therefore, as long as it is not absolutely worthless, when it is of course the same to everybody, is always a great public injury, for it helps the strong, and it weakens the weak. It is also a complete reversal of the true function of government; for governments are, in general, the only personages who can commit the crime of issuing bad paper. The business of government is to protect the weak against the strong. But such a paper currency as has been alluded to helps the strong against the weak. This evil is the more urgent when, as is the case with many foreign governments, the paper money is of small denominations. When the lowest note means a considerable sum, the struggle is between persons who do not sacrifice much, or do not gain much. But when the notes are so small that they come into the hands of the poor who live by day wages, the capitalist has every power, and therefore every temptation, to employ every advantage against the labourer.

CHAPTER V.

The Distribution of the Price of Products.

If we were to take the simplest or commonest thing, we should find on inquiry that a vast number of persons have contributed to the production of it. For example, a loaf of bread represents a great variety of labour. The seed from which the corn was grown was originally saved and sown, the farmer necessarily subsisting from other sources during the period in which the wheat was growing. Various kinds of agricultural labour precede and accompany the crop, from the time it sprouted till it is threshed; and several of these operations are aided by expensive and elaborate machinery. The sale of the corn is the business sometimes of many intermediaries. To grind it into flour, it is necessary that another set of labourers should quarry the stones, build the mill, dig the coal, spin and weave the cloth. A further class of labourers supplies the means for baking the bread, and for selling the article when it is ready for consumption. It is impossible to calculate the number of persons who have contributed to so simple and familiar an object.

It would be nearly as impossible to distinguish the portion which each of these contributories receives from the price of the article when it is sold. It is certain that some portion of the price does go to each person who assists in the production, and that the portions, if they could be

determined exactly, would fill up the aggregate price in quantities like those which chemical analysis discovers. in exceedingly complex substances.

But though we may not be able to count all the agents, and assign his portion in the distribution of the price to each, we can distinguish two broad classifications, under one of which every person who aids in the result will inevitably come; and a third, which, when the other two are satisfied, absorbs the remainder. We shall find, too, that the circumstances fixing the share which each of these claimants can appropriate, can be interpreted by a few broad but invariable laws. These two classifications are profit and wages; the third, which represents the residuum, is rent.

The analysis of the process by which value is imparted to physical objects cannot be continued to its first beginnings. The phænomena of human society, as interpreted by the conditions of human life, cannot by any experience be carried further back than to the existence of adult men and women. Man has a long and very helpless infancy, during which he must be maintained by the labour of others. He must have cost something in order to have grown up, and to have been able to supply himself with the coarsest and commonest necessaries of life. He must receive from the toil of others that subsistence which, continued during his infancy, will enable him to take his place, when he is strong enough; in order to fulfil the same duties towards his descendants which have been done for him by his progenitors. If the labourer has children, he must save some of his means in order to sustain them. We cannot conceive a state of society in which nothing is saved, but everything is consumed by

those who work. Such a state of society, as far as our experience can aid us, could have no beginning. If by some process, of whose possibility we have as yet no scientific evidence, such a society were suddenly constructed, or abnormally developed, but which, when fairly set on foot, would not or could not save to sustain its offspring, the society would come to an end in a generation.

These facts are alluded to in order to point out that, economically considered, the existence of mankind is conditioned by some sort of saving, even though this saving be employed in the maintenance of children, or in the supply of rude aids to manual or other muscular labour. The veriest savage feeds his children, and manufactures tools and weapons; that is, he employs labour on other objects than his own subsistence. He saves something, small though it be; and in this saving we see the germ of that which constitutes the wealth of nations-the accumulation of capital.

Capital is that part of a man's labour which he does not consume on his own necessities or pleasures, but accumulates in order to be able to continue his labour for the time during which he cannot get any product for that labour, or in order to shorten or economize his labour, or in order to provide for a succession of labourers after he has played his part. All these conditions must be fulfilled, and fulfilled simultaneously. He must make these accumulations, for he has impulses (how originated or encouraged we need not inquire) which lead him to provide for his offspring, to foresee the contingency of want, and to shorten or otherwise aid the labour which he gives. The accumulations of capital in highly organized and civilized states are only expansions of these motives

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