The Crown of Wild Olive
at a given time, persons, or societies, are entitled.
If all the money in the world, notes and gold, were destroyed in an
instant, it would leave the world neither richer nor poorer than it was.
But it would leave the individual inhabitants of it in different
relations.
Money is, therefore, correspondent in its nature to the title-deed of an
estate. Though the deed be burned, the estate still exists, but the
right to it has become disputable.
22. The real worth of money remains unchanged, as long as the proportion
of the quantity of existing money to the quantity of existing wealth or
available labour remains unchanged.
If the wealth increases, but not the money, the worth of the money
increases; if the money increases, but not the wealth, the worth of the
money diminishes.
23. Money, therefore, cannot be arbitrarily multiplied, any more than
title-deeds can. So long as the existing wealth or available labour is
not fully represented by the currency, the currency may be increased
without diminution of the assigned worth of its pieces. But when the
existing wealth, or available labour is once fully represented, every
piece of money thrown into circulation diminishes the worth of every
other existing piece, in the proportion it bears to the number of them,
provided the new piece be received with equal credit; if not, the
depreciation of worth takes place, according to the degree of its
credit.
24. When, however, new money, composed of some substance of supposed
intrinsic value (as of gold), is brought into the market, or when new
notes are issued which are supposed to be deserving of credit, the
desire to obtain the money will, under certain circumstances, stimulate
industry: an additional quantity of wealth is immediately produced, and
if this be in proportion to the new claims advanced, the value of the
existing currency is undepreciated. If the stimulus given be so great as
to produce more goods than are proportioned to the additional coinage,
the worth of the existing currency will be raised.
Arbitrary control and issues of currency affect the production of
wealth, by acting on the hopes and fears of men, and are, under certain
circumstances, wise. But the issue of additional currency to meet the
exigencies of immediate expense, is merely one of the disguised forms of
borrowing or taxing. It is, however, in the present low state of
economical knowledge, often possible for governments to venture on an
issue of currency, when they could not venture on an additional loan or
tax, because the real operation of such issue is not understood by the
people, and the pressure of it is irregularly distributed, and with an
unperceived gradation.
25. The use of substances of intrinsic value as the materials of a
currency, is a barbarism;--a remnant of the conditions of barter, which
alone render commerce possible among savage nations. It is, however,
still necessary, partly as a mechanical check on arbitrary issues;
partly as a means of exchanges with foreign nations. In proportion to
the extension of civilization, and increase of trustworthiness in
Governments, it will cease. So long as it exists, the phenomena of the
cost and price of the articles used for currency are mingled with those
proper to currency itself, in an almost inextricable manner: and the
market worth of bullion is affected by multitudinous accidental
circumstances, which have been traced, with more or less success, by
writers on commercial operations: but with these variations the true
political economist has no more to do than an engineer, fortifying a
harbour of refuge against Atlantic tide, has to concern himself with the
cries or quarrels of children who dig pools with their fingers for its
streams among the sand.
26. III.--RICHES. According to the various industry, capacity, good
fortune, and desires of men, they obtain greater or smaller share of,
and claim upon, the wealth of the world.
The inequalities between these shares, always in some degree just and
necessary, may be either restrained by law or circumstance within
certain limits; or may increase indefinitely.
Where no moral or legal restraint is put upon the exercise of the will
and intellect of the stronger, shrewder, or more covetous men, these
differences become ultimately enormous. But as soon as they become so
distinct in their extremes as that, on one side, there shall be manifest
redundance of possession, and on the other manifest pressure of
need,--the terms "riches" and "poverty" are used to express the opposite
states; being contrary only as the terms "warmth" and "cold" are
contraries, of which neither implies an actual degree, but only a
relation to other degrees, of temperature.
27. Respecting riches, the economist has to inquire, first, into the
advisable modes of their collection; secondly, into the advisable modes
of their administration.
Respecting the collection of national riches, he has to inquire, first,
whether he is justified in calling the nation rich, if the quantity of
wealth it possesses relatively to the wealth of other nations, be large;
irrespectively of the manner of its distribution. Or does the mode of
distribution in any wise affect the nature of the riches? Thus, if the
king alone be rich--suppose Croesus or Mausolus--are the Lydians or
Carians therefore a rich nation? Or if a few slave-masters are rich, and
the nation is otherwise composed of slaves, is it to be called a rich
nation? For if not, and the ideas of a certain mode of distribution or
operation in the riches, and of a certain degree of freedom in the
people, enter into our idea of riches as attributed to a people, we
shall have to define the degree of fluency, or circulative character
which is essential to the nature of common wealth; and the degree of
independence of action required in its possessors. Questions which look
as if they would take time in answering.[13]
28. And farther. Since the inequality, which is the condition of riches,
may be established in two opposite modes--namely, by increase of
possession on the one side, and by decrease of it on the other--we have
to inquire, with respect to any given state of riches, precisely in what
manner the correlative poverty was produced: that is to say, whether by
being surpassed only, or being depressed also; and if by being
depressed, what are the advantages, or the contrary, conceivable in the
depression. For instance, it being one of the commonest advantages of
being rich to entertain a number of servants, we have to inquire, on the
one side, what economical process produced the riches of the master; and
on the other, what economical process produced the poverty of the
persons who serve him; and what advantages each, on his own side,
derives from the result.
29. These being the main questions touching the collection of riches,
the next, or last, part of the inquiry is into their administration.
Their possession involves three great economical powers which require
separate examination: namely, the powers of selection, direction, and
provision.
The power of SELECTION relates to things of which the supply is limited
(as the supply of best things is always). When it becomes matter of
question to whom such things are to belong, the richest person has
necessarily the first choice, unless some arbitrary mode of distribution
be otherwise determined upon. The business of the economist is to show
how this choice may be a wise one.
The power of DIRECTION arises out of the necessary relation of rich men
to poor, which ultimately, in one way or another, involves the
direction of, or authority over, the labour of the poor; and this nearly
as much over their mental as their bodily labour. The business of the
economist is to show how this direction may be a Just one.
The power of PROVISION is dependent upon the redundance of wealth, which
may of course by active persons be made available in preparation for
future work or future profit; in which function riches have generally
received the name of capital; that is to say, of head-, or
source-material. The business of the economist is to show how this
provision may be a Distant one.
30. The examination of these three functions of riches will embrace
every final problem of political economy;--and, above, or before all,
this curious and vital problem,--whether, since the wholesome action of
riches in these three functions will depend (it appears), on the Wisdom,
Justice, and Farsightedness of the holders; and it is by no means to be
assumed that persons primarily rich, must therefore be just and
wise,--it may not be ultimately possible so, or somewhat so, to arrange
matters, as that persons primarily just and wise, should therefore be
rich?
Such being the general plan of the inquiry before us, I shall not limit
myself to any consecutive following of it, having hardly any good hope
of being able to complete so laborious a work as it must prove to me;
but from time to time, as I have leisure, shall endeavour to carry
forward this part or that, as may be immediately possible; indicating
always with accuracy the place which the particular essay will or should
take in the completed system.
FOOTNOTES:
[10] _See_ Appendix I.
[11] Observe these definitions,--they are of much importance,--and
connect with them the sentences in italics on this and the next page.
[12] [I cannot now recast these sentences, pedantic in their
generalization, and intended more for index than statement, but I must
guard the reader from thinking that I ever wish for cheapness by bad
quality. A poor boy need not always learn mathematics; but, if you set
him to do so, have the farther kindness to give him good compasses, not
cheap ones, whose points bend like lead.]
[13] [I regret the ironical manner in which this passage, one of great
importance in the matter of it, was written. The gist of it is, that the
first of all inquiries respecting the wealth of any nation is not, how
much it has; but whether it is in a form that can be used, and in the
possession of persons who can use it.]
CHAPTER II.
STORE-KEEPING.
31. The first chapter having consisted of little more than definition of
terms, I purpose, in this, to expand and illustrate the given
definitions.
The view which has here been taken of the nature of wealth, namely, that
it consists in an intrinsic value developed by a vital power, is
directly opposed to two nearly universal conceptions of wealth. In the
assertion that value is primarily intrinsic, it opposes the idea that
anything which is an object of desire to numbers, and is limited in
quantity, so as to have rated worth in exchange, may be called, or
virtually become, wealth. And in the assertion that value is,
secondarily, dependent upon power in the possessor, it opposes the idea
that the worth of things depends on the demand for them, instead of on
the use of them. Before going farther, we will make these two positions
clearer.
32. I. First. All wealth is intrinsic, and is not constituted by the
judgment of men. This is easily seen in the case of things affecting the
body; we know, that no force of fantasy will make stones nourishing, or
poison innocent; but it is less apparent in things affecting the mind.
We are easily--perhaps willingly--misled by the appearance of beneficial
results obtained by industries addressed wholly to the gratification of
fanciful desire; and apt to suppose that whatever is widely coveted,
dearly bought, and pleasurable in possession, must be included in our
definition of wealth. It is the more difficult to quit ourselves of this
error because many things which are true wealth in moderate use, become
false wealth in immoderate; and many things are mixed of good and