half less labour employed in producing a piece of linen than formerly; but this conclusion would still be defective if we did not add to it, that this must probably arise from a half more than formerly being produced by capital; that is to say, about a half more work than formerly must be considered as being now done by capital in the manufacture, of Linen.

Lord Lauderdale appears to me to be the first who entertained nearly accurate ideas on this point; and if he be wrong in all his other corrections of Dr Smith, as I decidedly think he is, still it must be acknowledged that he is right in this one.

"The author of the Wealth of Nations," says Lord Lauderdale, « appears to consider the profit of stock as paid out of, and therefore derived from, the value added by the workman to the raw material. He states, that- As soon as stock has accumulated in the hands of particular persons, some of them will naturally employ it in setting to work industrious people, whom they will supply with materials and subsistence, in order to make a profit by the sale of their work, or by what their labour adds to the value of the materials. In exchanging the complete manufacture, either for money, for labour, or for other goods, over and above what may be sufficient to pay the price of the materials and the wages of the workmen, something must be given for the profits of the undertaker of the work who hazards his stock in this adventure. The value which the workmen add to the materials, therefore, resolves itself, in this case, into two parts, of which the one pays their wages, the other the profits of their employer upon the whole stock of materials and wages which he advanced.'* And again, The labour of a manufacturer adds generally to the value of the materials which he works upon, that of his own maintenance and of his master's profit.'t

"If this, however," continues Lord Lauderdale, "was a

• Wealth of Nations, vol. i. p. 57, 4to edition. + Ibid. p. 400,

just and accurate idea of the profit of capital, it would follow, that the profit of stock must be a derivative, and not an original source of revenue; and capital could not therefore be considered as a source of wealth, its profit being only a transfer from the pocket of the labourer into that of the proprietor of stock."

is

It must be acknowledged, however, that the incorrectness thus noticed by Lord Lauderdale in the Wealth of Nations more in the expression than any thing else, as Dr Smith is not led into any farther error in consequence of these passages and a few others of similar import; for he founds none of his future reasonings, or of his doctrines in regard to taxation, on the supposition of labour producing all and capital nothing. It is singular, however, that Mr Ricardo, who has so faithfully followed Lord Lauderdale in almost all the erroneous doctrines wherein he differs from Dr Smith,† should not have seconded him when he happened to be right, nor was not led by his Lordship's numerous and just hints, in reference to the independent productiveness of capital, to suspect the soundness of his theory that labour produces all.

To return, and conclude the chapter:

Inquiry into the Nature and Origin of Public Wealth, chap. iii. pp. 149-152, second edition,

+ Particularly in the three following:-1st, Denying the distinction between productive and unproductive labour; 2d, Denying that labour is the measure of value; and, 3d, In the distinction he attempts to lay down between wealth and riches.

Among others the following:-" It is apprehended that in every instance where capital is so employed as to produce a profit, it uniformly arises either from its supplanting a portion of labour which would otherwise be performed by the hand of man, or from its performing a portion of labour which is beyond the reach of the personal exertions of man to accomplish.”—LAUDERDALE's Inquiry, &c. p. 155, second edition.

Under the system of the division of labour, and as soon as that system, together with increasing wealth, has been carried to any considerable extent, it becomes absolutely necessary, as we have already seen, to adopt and establish some one, or some very few vendible commodities, as the common measure or measures of value, which may serve the purpose of regulating contracts, or of expressing the values agreed to be transferred, both at distant periods and in immediate exchanges, as well as to regulate the value of every species of written obligation (as bills, tokens, &c.,) which circulate as money. Gold and silver have been universally adopted for this purpose, and as long as these metals retain nearly their present cost and value, there are no other known articles that could with advantage be substituted for them, or that could supply their place, and serve all the purposes of money nearly so well. Still, however, these articles are but arbitrarily chosen to serve these purposes, and are still subject to the possibility of great variations in their value, and consequently may still require to be corrected, or even to be discarded altogether from performing this office if they should happen to vary in a great degree. And what other articles could then with certainty be appealed to if this possible case were actually to happen ?—The natural wages of common labour, or determinate quantities of corn, are the only defined or definable articles which could then be appealed to with certainty to perform the office of correctors, or to determine the value of previous contracts; and to bring this controversy to a short conclusion, we have only to consider what would be the comparative degree of security or certainty to the proprietor of a rent or annuity for a hundred years to come, if it were reserved or stipulated to be paid in gold or silver, in corn, or in days' wages of common labour. Let such rent or annuity be of any given amount :-Suppose it were one pound of gold, fifteen pounds of silver, twenty quarters of wheat, or five hun

dred days' wages of common labour, and that these different commodities or quantities of wealth were equivalent in value and exchangeable for one another at the present time, and a very little consideration will be sufficient to convince us that whilst the gold and silver might vary to almost any conceivable extent, the corn and wages could vary but very little. The gold and silver might, at the end of the hundred years, be exchangeable for very different quantities of labour and commodities from those it exchanges for at present; whereas the corn, as we have already seen, could vary comparatively little in its command of either; and the five hundred days' wages of common labour, in whatever commodities they might then be realized, whilst they would be identical in their command of labour, would vary still less than the corn, if they varied at all in their command over commodities in general.

Suppose that, from additional facility or difficulty of production, gold and silver should, at the end of the hundred years, have fallen or risen in value one-half, and should then of course be equivalent, in the one case, to but 10 quarters of wheat and 250 days' wages, and in the other to 40 quarters and 1000 days' wages, is it not plain that our annuitant would in the one case be stripped of one-half of his income, namely, of 10 quarters of wheat, or 250 days' wages, and that in the other his debtor and bondsman would be robbed to double that extent, as he would be required to part with 40 quarters or 1000 days' wages?-Let us suppose farther, the still possible case, that the gold and silver should have risen or fallen in a quadruple rate, and it will appear that the annuitant might starve in the one case, and his debtor be perhaps ruined or robbed at least to a still greater extent in the other,-events which could not possibly happen if the annuity were payable in corn or in days' wages of common labour.

APPENDIX TO CHAPTER III.

ON THE NATURE OF value.

SECTION I.

INTRODUCTION.

THERE is no question in political economy which has excited greater attention of late, or which has given rise to more conflicting opinions among the present cultivators of that science, than that which relates to the nature of value. In the Ricardo school this question has produced an absolute schism, although most of their writers on both sides agree with their master in pronouncing it " a difficult question." They have all indeed, as it appears to me, very much exaggerated the importance of this question; and yet it may safely be affirmed, that their success in endeavouring to make the subject clearer than it was left by Dr Smith, or to go to the bottom of it, has not by any means corresponded with the magnitude of their labours.

That the subject is not free from intricacy or difficulty when pushed to its utmost metaphysical limits (as is the case indeed with innumerable questions besides this) may be allowed; but it appears to me that all the great practical truths properly and strictly connected with the science of political economy and taxation may be perfectly well settled without going this extreme length, or indeed without any very deep or abstruse treatment of it. As, however, the whole theory and peculiar doctrines of the writers just alluded to seem to be built chiefly, if not wholly, on their peculiar views of this question, we are forced as it were to follow them into the ulterior discussion of it; although it