does not falsify the principle above enunciated. The circumstances which have prevented a rise in the price of wheat are patent to all. Before 1848, we were in a great degree restricted to our own soil for our supplies of corn. Now we are freely permitted to purchase wheat from any country which offers it for sale. As many as ten million quarters of wheat are often imported in one year; and as the means of communication improve the area from which we draw our supplies is constantly extended; thus wheat is often now sent in considerable quantities to England from California and Australia, and even such a remote region as the Punjab will regularly export wheat to Great Britain. The influence therefore of free trade has been analogous to that which would have been exerted if a tract of fertile land had been added to the cultivable area of this island. Suppose that, in consequence of the great abundance of fertile land in the valley of the Mississippi, wheat grown there could be sold in our markets at a less price than would adequately remunerate the English agriculturist if he grew wheat on many of the less productive soils in England. Under these circumstances the valley of the Mississippi would, as far as the supply of wheat is concerned, serve England the same purpose as if a tract of fertile land could be added to her shores. We are quite ready to admit, that the effects attributed by political economy to one particular cause, seldom occur with strict exactness; such perfect conformity could not take place unless the cause acted alone, and this is very rarely the case; the practical utility of political economy however is not for this reason lessened, for the science demonstrates that certain results must ensue, if a counteracting influence does not come into action. We will illustrate our meaning by referring to an argument, which we believe is unanswerable when urged in support. of free trade. The population of England is advancing; if we are restricted to our own soil for supplies, then food will be obtained at a greater cost of labour and capital, and food must ultimately become much dearer. It therefore becomes most important that the fertile soil of the whole world should, as far as possible, be made available to supply us with the produce we may require. BOOK I. CH. VII. notrisen in England. Increase in We must next consider how the production of wealth the labour BOOK I. CH. VII. ing population. Influence of a demand for labour upon the is affected by an increase in the amount of labour, or, in other words, by an increase in the number of the labouring population. Labour is increased when it is made more efficient. If a machine is introduced which enables one labourer to do the work of six, of course the amount of labour in the country is augmented, but this increase is due to improvement in the efficiency of labour, a subject which was considered in the last chapter. We must here therefore restrict ourselves to a discussion of the consequences which result, when an increase in the number of the labouring population causes more wealth to be produced. If a greater quantity of any commodity is required, a greater number of labourers must be employed, unless some industrial improvements are introduced. Suppose, for instance, there suddenly arose a very active demand for English cottons in China; a much greater number of labourers would soon be engaged in cotton manufactories. It may be asked, How is the increased number of labourers to be obtained? Surplus hands will be drawn from other employments, and emigration will be checked, if there is a great demand for labour. If the demand for additional labour continues, an increase of population will be powerfully stimulated, and the labour required will ultimately be supplied principally from this source. It is important to point out in what manner an increase of population is promoted by an active demand for labour. Labour is in demand when trade is good; then wages are high, and the labourers are prosperous. It is found that the number of marriages amongst the poorer classes is amount of invariably much greater when the labourers are prosperpopulation. ous. There is no surer test of the prosperity of the labouring class than the low price of bread, and there are few statistical facts better substantiated than that the marriages amongst the labouring class increase with the fall in the price of bread. It may be reasonably assumed that wages are high when trade is good. But from what source are these higher wages supplied? It must be from the capital of the country, because this is the fund from which the labourers' wages are provided; the circulating capital employed in any trade or manufacture must be increased if the labourers engaged in it received higher wages. It may be here remarked, that when a trade is active, the profits are high, and thus a great inducement is offered to those engaged as employers in the trade, not only to save more, but to apply a greater amount of capital to their business; thus additional capital is either borrowed or is withdrawn from other investments. But now, having pointed out some of the sources from which an increased number of labourers will be obtained, we have next to consider how this increased population will be fed. Reference has just been made to some of the sources from which the additional wages paid to the labourers will be supplied when an active trade causes a greater demand for labour. Let us suppose, therefore, that when the labouring population has increased, the circulating capital of the country has been proportionally augmented; but if there is a larger population, more food will be required, and the important question arises, Under what conditions is this food to be obtained? In answering this question we avail ourselves of that principle which has been stated in the first part of this chapter, namely, that there is a tendency for food to become more expensive as the demand for it increases, because less productive land has to be resorted to, the returns from which are not so large in proportion to the labour and capital expended upon it. The production of an increased quantity of wealth requires a greater number of labourers, and when the labouring population is thus augmented food will become more expensive, unless the additional food required can be obtained either by agricultural improvements, or can be imported at a comparatively cheap rate from other countries. All that we have here stated is strikingly exemplified by the events which have occurred within the last few years. The trade of the country has advanced with marvellous rapidity, the number of labourers now engaged in the manufacturing industry of this country greatly exceeds the number employed twenty years since. The capital invested in our manufactures has even advanced more rapidly than the increase of population. Not only are there more labourers, but the wages of these labourers have risen very decidedly within the last few years. Two causes, therefore, have combined to increase the demand for food, namely, a larger population and a F. M. F BOOK I. CH. VII. Relation between increase of population and increased production from land. Exemplifi cation of these principles in late years. BOOK I. better paid labouring class. But it may be said political economy would predict that, in consequence of such a demand, all food will become more expensive; and yet bread is cheaper. But as previously remarked, we have now the whole world from which to obtain our supplies of wheat, and the cost of carrying wheat from one country to another is comparatively small. There has, however, been a most decided rise in the value of those articles of food which we cannot with such facility obtain from other countries. For instance, it is much more difficult and much more expensive to import meat than corn. Meat must reach a scarcity price in England before it would be remunerative to send cattle and sheep from even the eastern shores of America, and yet corn is constantly imported with considerable profit from regions as remote as California. Since, therefore, we are to a much greater extent restricted to our own soil for meat and dairy produce, importation has not been able to counteract that rise in the price of these articles which, according to political economy, must accompany the increased consumption of a more numerous and better paid labouring class; the result has been that meat and dairy produce have become fifty or sixty per cent. more expensive within the last few years. The cost at In all probability the labouring population will for many years continue to increase; every year therefore a greater quantity of food will be consumed in this country; the mode in which this increased supply of food will be obtained must mainly determine what will be the future condition of our labouring population. If the opening of new sources of foreign supply and the introduction of agricultural improvements should enable an increased quantity our labour of food to be procured without any advance in its value, which an increased supply of food can be obtained will mainly determine the con dition of ing popu lation. then a larger population may be maintained in an improved material condition. If on the other hand foreign importations and agricultural improvements should not exert a sufficiently powerful influence to check a rise in the value of food, as the demand for it increases (or, in other words, if resort must be had to less productive soils in order to supply the wants of an increasing population), then the condition of the labouring population will gradually but steadily deteriorate. IN CHAPTER VIII. ON THE INCREASE OF CAPITAL. N the preceding chapter we have remarked upon some of the more prominent conditions which determine the increased production of wealth, as far as it depends upon an increase of the cultivated land, and upon an increase in the number of the labouring population. But larger production also requires an increase of capital. It must be evident from the remarks we have made upon capital, that an increase of capital is as essential to a larger production of wealth as an increase of land and labour. If land, for instance, is more highly cultivated, additional capital must be applied to it: and new land cannot be brought under cultivation without the application of capital to it. If more labourers are employed, a larger fund, in the form of circulating capital, must be devoted to pay their wages. Improvements in the various processes of industry cannot be introduced without the expenditure of capital. Machinery, warehouses, manufactories, railroads, ships, all such industrial appliances as these, exhibit the various modes in which the fixed capital of a nation assists her industry. It has been previously asserted as a fundamental proposition, that capital, whether fixed or circulating, is the result of saving. Increased capital, therefore, implies increased saving; and hence the laws may be determined which regulate the increase of capital by considering the causes upon which depends the increased saving or accumulation of wealth. There are two principal motives which induce men to save; and these are, first, a prudent foresight with regard to the future; and, secondly, a desire BOOK I. CH. VIII. Increased production of wealth implies an capital, increase of and, therefore, insaving, creased |