communities a desire to save is scarcely ever prevalent. This arises from the inability of totally uncultivated persons to look forward to the future; with such the present is everything; the future is a blank about which they do not trouble themselves. The desire to save is also checked in some cases by the insecurity of property. In those countries where there is no settled government, and where anarchy usurps the place of law, the owner of wealth is by no means sure that he will be allowed to retain his possessions. He is the object of the envy and rapacity of his neighbours, every one of whom is perhaps looking out for an opportunity of robbing him.

Joint-Stock Companies. In a country like England the desire to save is promoted by the variety of means that exists of investing small capitals, which if separately applied would not often be productive of wealth. If a professional man, for instance, has saved £100, he has probably neither opportunity nor inclination to employ this sum in any business, but if he wishes to use it as capital he can invest it in a joint-stock company; that is, a mercantile undertaking the capital of which is provided by a large number of persons. It is therefore evident that joint-stock companies are advantageous to the country, by the facility they afford of increasing the amount of wealth which is used as capital.

This fact suggests an illustration of the important position which the security of property occupies in promoting the increase of capital. A few years ago a great many joint-stock companies failed; the shareholders consequently suffered great loss, and in some instances were ruined. This produced a great feeling of distrust and insecurity. For example, if a man by strict economy had accumulated a certain quantity of money, he was very likely to reply to any one who advised him to invest it in a joint-stock company, "Oh no! I shall not risk it.

Look what our friends A. B. and C. have lost, through investing in the Overend and Gurney Company, and the Crédit Foncier." But warnings of this sort are only too readily forgotten. The promise of high interest in the glowing terms of a prospectus is generally sufficient to attract a large amount of capital out of the pockets of investors into those of the directors and promoters of fraudulent and bankrupt companies.

A Glut of Capital. Some persons imagine that no harm is done by checking the supply of capital, for they say that if it were not for circumstances of the kind just described, and the luxurious expenditure of the rich, there would be more capital than could be employed; or, in other words, there would be "a glut of capital." If the nature of capital is borne in mind it will be seen that it is quite unnecessary to fear any evil results from the increase of capital. It has been frequently stated that capital is that part of wealth which is set aside to assist future production, by providing the shelter, protection, tools, and materials which the work requires, and by feeding and otherwise maintaining the labourers during the process of production. If the supply of capital is increased, it will be engaged in some fresh employment, or else it will be absorbed in the industries already existing. In both these cases there will be a greater amount of circulating capital, and the wages-fund will be augmented; unless therefore the increase in the wages-fund is counterbalanced by a corresponding increase in the numbers of those among whom the wages are distributed, wages will rise, and the condition of the labouring classes will be improved.

It is therefore evident that although the benefit is too often counteracted by the absence of prudential habits on the part of the labourers, any circumstances which increase capital tend powerfully to ameliorate the condition of the poor. The most important practical conclusions

may be drawn from this fact, for it shows that the capitalist, and not the spendthrift or the almsgiver, is he who renders the truest service not only to himself, but to the whole community.

The principal propositions concerning the Production of Wealth have now been stated, in the three chapters on Land, Labour, and Capital. The explanation of the functions of capital has probably presented some difficulty to the beginner. It is essential that these difficulties should be overcome; for until they are thoroughly mastered it is impossible clearly to understand the more complicated questions which will be discussed in the section on the Distribution of Wealth.

QUESTIONS ON CHAPTER III. On Capital.

I. What is Capital?

2.

Show by examples that capital is a requisite of production.

3. What is that part of capital called which provides the wages of labourers ?

4. Define the various ways in which capital assists production.

5. Prove that the wealth consumed in luxuries is not capital, and does not therefore assist production or increase the wages-fund.

6. Prove by examples that a demand for commodities is not a demand for labour.

7. Why is it erroneous to suppose that luxurious expenditure is good for trade? Give examples.

8. Capital is the result of saving, but does hoarded wealth add to the capital of a country?

9. What is the difference between fixed and circulating capital?

10. Of what does circulating capital principally consist? II. In what way are labourers sometimes temporarily injured by the conversion of circulating into fixed capital? 12. What circumstances produce and foster a desire to save?

13. How does commercial morality act upon the accumulation of capital?

14. What is meant by a "glut of capital"?

15. Show that the danger of a glut of capital is imagi

nary.

16. Prove from the propositions enunciated in this chapter that the capitalist is the real benefactor of the wages-receiving classes, and not the spendthrift or the almsgiver.

I. Is my ink capital? If I have 500,000 gallons of it, is that a glut of capital?

2. Is a cart-horse capital? And if so, is he fixed or circulating?

3. Are fire-arms capital?

4. If a boy consumed a shilling's worth of penny tarts every day would he cause an increased demand for labour?

5. If a man kept £5000 shut up in a box, would it be capital?

6. If he invested it in a railway, would it be capital? 7. If he invested it in a loan to a nation to enable it to carry on a war, would it be capital ?

8. If there is a law which permits one class of persons to rob another class without affording the latter any redress, what effect does this law have on the accumulation of wealth?

9. Is the labour of a cook productive or unproductive?

SECTION II.

On the Exchange of Wealth.-Introductory Remarks.

Exchange implies the existence of private property. The expression "exchange of wealth" implies the existence of property. It also implies that property is possessed not by society at large but by individuals and classes. If property were possessed by the whole community in the same way as that described in "the Acts of the Apostles" as the custom of the early Christians, there could be no such thing as exchange of wealth. "Neither said any of them that ought of the things which he possessed was his own; but they had all things in common." "Neither was there any among them that lacked: for as many as were possessors of lands or houses sold them, and brought the prices of the things that were sold, and laid them down at the apostles' feet : and distribution was made unto every man according as he had need."

Socialism. If the state of things described in these verses were general the dream of the socialist would be realised. Property would not be destroyed, but "the exchange of wealth” would be a meaningless expression, for no one could exchange that which belonged as much to every one else as to himself. The exchange of wealth consequently implies the existence of individual property;