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The fund from which saving can be made, is the surplus of the produce of labour, after supplying the necessaries of life to all concerned in the production (including those employed in replacing the materials, and keeping the fixed capital in repair). More than this surplus cannot be saved under any circumstances. As much as this, though it never is saved, always might be. This surplus is the fund from which the enjoyments, as distinguished from the necessaries of the producers, are provided; it is the fund from which all are subsisted, who are not themselves engaged in production; and from which all additions are made to capital. It is the real net produce of the country. The phrase, net produce, is often taken in a more limited sense, to denote only the profits of the capitalist and the rent of the landlord, under the idea that nothing can be included in the net produce of capital, but what is returned to the owner of the capital after replacing his expenses. But this is too narrow an acceptation of the term. The capital of the employer forms the revenue of the labourers, and if this exceeds the necessaries of life, it gives them a surplus, which they may either expend in enjoyments or save. For every purpose for which there can be occasion to speak of the net produce of industry, this surplus ought to be included in it. and not otherwise, the net produce measure of its effective power; of what it can spare for any purpose of public utility, or private indulgence; the portion of its produce of which it can dispose at pleasure; which can be drawn upon to attain any ends, or gratify any wishes, either of the government or of individuals; which it can either spend for its satisfaction, or save for future advantage.
When this is included, of the country is the
The amount of this fund, this net produce, this excess of production above the physical necessaries of the producers, is one of the elements that determine the amount of saving. The greater the produce of labour after supporting the labourers, the more there is which can be saved. The same thing also partly contributes to determine, how much will be saved.
A part of the motive to saving consists in the prospect of deriving an income from savings; in the fact that capital, employed in production, is capable of not only reproducing itself but yielding an increase. The greater the profit that can be made from capital, the stronger is the motive to its accumulation. That indeed which forms the inducement to save, is not the whole of the fund which supplies the means of saving, not the whole net produce of the land, capital, and labour of the country, but only a part of it, the part which forms the remuneration of the capitalist, and is called profit of stock. It will however be readily enough understood, even previously to the explanations which will be given hereafter, that when the general productiveness of labour and capital is great, the returns to the capitalist are likely to be large, and that some proportion, though not an uniform one, will commonly obtain between the two.
§ 2. But the disposition to save does not wholly depend on the external inducement to it; on the amount of profit to be made from savings. With the same pecuniary inducement, the inclination is very different, in different persons and in different communities. The effective desire of accumulation is of unequal strength, not only according to the varieties of individual character, but to the general state of society and civilization. Like all other moral attributes, it is one in which the human race exhibits great differences, conformably to the diversity of its circumstances and the stage of its progress.
On topics which if they were to be fully investigated would exceed the bounds that can be allotted to them in this treatise, it is satisfactory to be able to refer to other works in which the necessary developements have been presented more at length. On the subject of Population this valuable service has been rendered by the celebrated Essay of Mr. Malthus: and on the point which now occupies us I can refer with equal confidence to another, though a less known.
work, "New Principles of Political Economy," by Mr. Rae*. In no other book known to me is so much light thrown, both from principle and history, on the causes which determine the accumulation of capital.
All accumulation involves the sacrifice of a present, for the sake of a future good. But the expediency of such a sacrifice varies very much in different states of circumstances; and men's willingness to make it, varies still more.
In weighing the future against the present, the uncertainty of all things future is a leading element; and that uncertainty is of very different degrees. "All circumstances," therefore, "increasing the probability of the provision we make for futurity being enjoyed by ourselves or others, tend" justly and reasonably "to give strength to the effective desire of accumulation. Thus a healthy climate or occupation, by increasing the probability of life, has a tendency to add to this desire. When engaged in safe occupations, and living in healthy countries, men are much more apt to be frugal, than in unhealthy or hazardous occupations,
* This treatise is an example, such as not unfrequently presents itself, how much more depends on accident, than on the qualities of a book, in determining its reception. Had it appeared at a suitable time, and been favoured by circumstances, it would have had every requisite for great success. The author, a Scotchman settled in the United States, unites much knowledge, an original vein of thought, a considerable turn for philosophic generalities, and a manner of exposition and illustration calculated to make ideas tell not only for what they are worth, but for more than they are worth, and which, sometimes, I think, has that effect in the writer's own mind. The principal fault of the book is the position of antagonism in which, with the controversial spirit apt to be found in those who have new thoughts on old subjects, he has placed himself towards Adam Smith. I call this a fault, (though I think many of the criticisms just, and some of them far-seeing), because there is much less of real difference in opinion than might be supposed from Mr. Rae's animadversions; and because what he has found vulnerable in his great predecessor is chiefly the "human too much" in his premises; the portion of them that is over and above what was either required or is actually used in the establishment of his conclusions.
and in climates pernicious to human life. Sailors and soldiers are prodigals. In the West Indies, New Orleans, the East Indies, the expenditure of the inhabitants is profuse. The same people, coming to reside in the healthy parts of Europe, and not getting into the vortex of extravagant fashion, live economically. War and pestilence have always waste and luxury among the other evils that follow in their train. For similar reasons, whatever gives security to the affairs of the community, is favourable to the strength of this principle. In this respect the general prevalence of law and order, and the prospect of the continuance of peace and tranquillity, have considerable influence*." The more perfect the security, the greater will be the effective strength of the desire of accumulation. Where property is less safe, or the vicissitudes ruinous to fortunes are more frequent and severe, fewer persons will save at all, and of those who do, many will require the inducement of a higher rate of profit on capital, to make them prefer a doubtful future to the temptations of present enjoyment.
These are considerations which affect the expediency, in the eye of reason, of consulting future interests at the expense of present. But men's inclination to make this sacrifice does not solely depend upon its expediency. The disposition to save, is often far short of what reason would dictate: and at other times, is liable to be in excess of it.
Deficient strength of the desire of accumulation may arise from improvidence, or from want of interest in others. Improvidence may be connected with intellectual as well as moral causes. Individuals and communities of a very low state of intelligence are always improvident. A certain measure of intellectual developement seems necessary to enable absent things, and especially things future, to act with any force on the imagination and will. The effect of want of interest in others in diminishing accumulation, will
* Rae, p. 123.
be admitted, if we consider how much saving at present takes place, which has for its object the interest of others rather than of ourselves; the education of children, their advancement in life, the future interests of other personal connexions, the desire of promoting by the bestowal of money or time, objects of public or private usefulness. If mankind were generally in the state of mind to which some approach was seen in the declining period of the Roman empire-caring nothing for their heirs, as well as nothing for friends, the public, or any object which survived them-they would seldom deny themselves any indulgence for the sake of saving, beyond what was necessary for their own future years; which they would place in life annuities, or in some other form which would make its existence and their lives terminate together.
§ 3. From various degrees of these deficiencies, intellectual and moral, there is in different portions of the human race a greater diversity than is usually adverted to, in the strength of the effective desire of accumulation. A backward state of general civilization is often more the effect of deficiency in this particular than in many others which attract more attention. In the circumstances, for example, of a hunting tribe, "man may be said to be necessarily improvident, and regardless of futurity, because, in this state the future presents nothing which can be with certainty either foreseen or governed. Besides a want of the
motives exciting to provide for the needs of futurity through means of the abilities of the present, there is a want of the habits of perception and action, leading to a constant connexion in the mind of those distant points, and of the series of events serving to unite them. Even therefore if motives be awakened capable of producing the exertion necessary to effect this connexion, there remains the task of training the mind to think and act so as to establish it."
For instance: "Upon the banks of the St. Lawrence