Petty's Verbum Sapienti shows what was understood by the wealth of a nation in 1691. It contains a 'computation' of the 'wealth of the kingdom,' of which the following is a summary:

Land (24,000,000 acres yielding

It does not appear that any one ever quarrelled with this 'computation' on the ground that the gold and silver should alone have been reckoned, and the 'wealth of the kingdom' consequently valued at six millions instead of two hundred and fifty.

About the middle of the eighteenth century some writers seem to have imagined that the coin of a country must always bear the same proportion to the rest of its wealth, so that the increase of coin would measure the increase of wealth. But Steuart, the last and most systematic of the school to which Adam Smith was so hostile, disapproved of 'the modern way of estimating wealth by the quantity of coin in circulation.'s Adam Smith's predecessors really knew as well as he did that the money of a nation was not its only wealth, and the emphasis with which some writers have insisted on the fact is to be regarded merely as the and silver, which is there buried and never returns.'-East India Trade, 1696, p. 12. Even Sir Theodore Janssen, the author of General Maxims in Trade, 1713, reprinted in the British Merchant, 1721, only claimed that 'the importing of commodities of mere luxury is so much real loss as they amount to,' and admitted that the imports of things of absolute necessity cannot be esteemed bad,' vol. i. p. 6.

1 Chap. i. pp. 3-7.

* See An Essay on the National Debt and National Capital, or the Account truly stated, Debtor and Creditor, by Andrew Hooke, 1750. A summary of Hooke's conclusions will be found in R. Giffen, Growth of Capital, pp. 87, 88. 3 An Inquiry into the Principles of Political Economy, 1767, vol. i. p. 177 ; vol. ii. p. 42 (in Works, vol. i. p. 238; vol. iii. pp. 56, 57).

E.g. M'Culloch, Introductory Discourse to Wealth of Nations, p. xix. J. S. Mill, Principles, Preliminary Remarks, 1st ed. vol. i. pp. 2-4, People's ed. pp. 1, 2.

consequence of a desire to make a good point against protectionism, which has almost always been associated with fallacies about 'carrying money out of the country.'

§ 3. Restriction to objects with exchange value.

But while no one really considered the wealth of a nation to consist exclusively of its money, every one took it for granted that it consisted exclusively of objects which possessed a money value. The physiocrats, from whom Adam Smith derived many of the ideas which he introduced into English political economy, expressly excluded biens gratuits from richesses :

'Les biens,' says Quesnay, 'sont ou gratuits ou commerçables. Les biens gratuits sont ceux qui sont surabondants et dont les hommes peuvent jouir partout et gratuitement, tel est l'air que nous respirons, la lumière du soleil qui nous éclaire, etc. Les biens commerçables sont ceux que les hommes acquièrent par le travail et par échange : c'est ce genre de biens que nous appelons richesses, parce qu'ils ont une valeur vénale, relative et réciproque les uns aux autres, et en particulier à une espèce de richesse que l'on appelle monnaie, qui est destinée à représenter et à payer la valeur vénale de toutes les autres richesses.'1

Though he does not say so, there is no doubt that Adam Smith shared Quesnay's opinion. It is implied in his making the wealth of a nation consist exclusively of the produce of labour, and in his attaching great importance to the 'exchangeable value' of the whole of this produce.2 It is indeed quite natural where private property is established to omit all things which possess no money value from the catalogue of the things which constitute an individual's wealth, because however useful or agreeable they may be to him, their possession does not make him any better off than his fellows. But national wealth is on a somewhat different footing. This was perceived in 1804 by Lauderdale, who was desirous of showing that the Sinking Fund was about to ruin the nation,

1 Euvres, ed. Oncken, p. 289 note.

* See e.g. Bk. I. ch. vi. p. 24 a; Bk. II. ch. ii. p. 123 b. and ch. iii. pp. 149 b, 150 b, 216 a.

not because it paid off little or no debt, but because it paid off too much. With this purpose in view, he endeavoured to prove that public wealth and private riches are not increased in the same way, and that value, though necessary to private riches, is not necessary to public wealth. Value, he says, is dependent on scarcity, while national wealth is dependent on abundance. For instance, a bad harvest is certainly inimical to national wealth, although the smaller quantity of grain produced may be worth more than the greater quantity produced in a good year. So public wealth must be defined 'to consist of all that man desires as useful or delightful to him,' and individual riches' must be defined to consist of all that man desires as useful or delightful to him which exists in a degree of scarcity.'1 The absurdity of Lauderdale's conclusions about the Sinking Fund blinded his contemporaries to much of what was acute and valuable in his arguments. They seem to have considered that he was sufficiently answered by the assertion that if there is a rise in the value of grain there is a fall in the value of other things, a statement which leads to nothing. If the whole year's produce be valued in grain it will appear much smaller than in an ordinary year; if it be valued in any other commodity it will appear larger, and this is the fact of which Lauderdale complains. In Commerce Defended (1808) James Mill remarks that wealth is relative to the term value,' and says, 'The term wealth will always be employed in the following pages as denoting objects which have a value in exchange, or at least notice will be given if we have ever occasion to use it in another sense.' The author of the article 'Political Economy' in the fourth edition of the Encyclopædia Britannica, writing in 1810, is equally unhesitating :

2

3

'External accommodations which are in complete and universal abundance, the air we breathe, the light of heaven, are not wealth. To constitute this, the article must exist in some degree of scarcity. It is then only that it can possess exchangeable value, that its possessor can procure other commodities in exchange for it.' 4

J.-B. Say gave, in 1814, the following definition of

1 Nature and Origin of Public Wealth, 1804, pp. 56, 57.

2 Edinburgh Review, July 1804, pp. 351, 352.

& P. 22.

4 Vol. xvii. p. 107 b.

national wealth: 'La richesse d'une nation est la somme des valeurs possédées par les particuliers dont se compose cette nation et de celles qu'ils possèdent en commun.'1 But what is the meaning of 'la somme des valeurs'?

C'est

What

'VALEUR ou VALEURS (au pluriel) se prend quelquefois pour la chose ou les choses évaluables dont on peut disposer, mais en faisant abstraction de la chose et en ne considérant que sa valeur. ainsi qu'on dit: Il a déposé des valeurs pour gage de sa dette.'2 These definitions suggest that it is possible to get an idea of national wealth by considering only the value of the things which constitute it. Against this theory Ricardo wrote a whole chapter, which he entitled 'Value and Riches, their Distinctive Properties.' If he had had the literary education which, according to M'Culloch, some of his contemporaries thought he had been fortunate in escaping, he would have known that it was unnecessary in English to explain that value 'essentially differs from riches.' No one ever imagined that value' and 'riches' were synonymous. Ricardo really wished to show was simply the fact that the wealth of a nation does not vary with the value of its produce (reckoning the value of the produce in his peculiar method by the amount of labour necessary for its production), but with the abundance of the produce.5 Malthus, seldom blessed with a clear-cut opinion on any subject, thought that ' in making an estimate of wealth, it must be allowed to be as grave an error to consider quantity without reference to value as to consider value without reference to quantity.' He saw that though a country continued to have the same quantity of produce, or rather of products, a change might take place in its wealth owing to events which affected the value of the products, and rashly assumed that the alteration in wealth was caused by the change of value, instead of directly by the events which caused the change of value."

1 Traité, 2d ed., 1814, vol. ii. p. 472.

2 Ibid. p. 478.

The Works of David Ricardo, ed. M'Culloch, pp. xv, xvi.

1st ed., p. 377; 3d ed. in Works, p. 165.

5 Cf. with the chapter quoted, Letters of Ricardo to Malthus, ed. Bonar, pp. 211, 212.

• Political Economy, 1820. p. 344.

7 lbid. p. 340.

However, in his Definitions (1827) he did not assert that in order to be wealth' an article must possess value, but only that it must have required some portion of human exertion to appropriate or produce." M'Culloch thought it necessary to make 'exchangeable value' an indispensable condition of wealth, in order to exclude 'atmospheric air and the heat of the sun,' and similar necessary, useful, and agreeable products.' J. S. Mill says: 'Things for which nothing could be obtained in exchange, however useful or necessary they may be, are not wealth in the sense in which the term is used in Political Economy.' In answer to the objection that this would make the wealth of mankind increase if air 'became too scanty for the consumption,' he reproduces the argument which had already done duty in 1804:

'The error,' he says, 'would lie in not considering that however rich the possessor of air might become at the expense of the rest of the community, all persons else would be poorer by all that they were compelled to pay for what they had before obtained without payment.' 8

But to the theory that nothing which does not possess value can constitute part of the wealth of a community there is the fatal objection that it makes the existence of wealth dependent on the existence of separate property. Long before J. S. Mill wrote, Torrens had pointed this out. Conditions, he showed, can easily be conceived in which human beings would have wealth, but nothing with exchange value. Nothing could be said to have any value where there were no exchanges; and so it appears that an isolated man or an isolated communist society could not possibly have any wealth, if wealth be confined to things with exchange value.* Some years later this conclusion was boldly accepted by Whately and Senior. Whately, after remarking that' Catallactics, or the Science of Exchanges,' would be the 'most descriptive, and on the whole least objectionable,' name for what is commonly called political economy, observes that a man like 'Robinson Crusoe is in a situation of which Political 1 P. 234. 2 Principles, 1825, p. 5. Principles, Preliminary Remarks, People's ed. pp. 4-5. See above,

p. 6.

• Production of Wealth, 1821, pp. 7-17.